Late paying customers can be a major problem for your business so it is important to let them know as soon as possible if they seem to be overstepping the mark on paying you what is owed.
With this in mind here are our top three ways to handle late paying customers before the problem gets out of hand.
Try talking to your customers
The important thing to do is not to panic if you have a late paying customer. Sometimes it may just be an oversight on their part which can be quickly resolved with a simple phone call or in person if they are close by.
Be firm but friendly
If you have tried going down the route of a gentle reminder and they’re still not willing to pay up then it is important to find out the reason why they’re not paying on time.
It could be that they are suffering some kind of financial difficulty in which case it is up to you to decide if you know your customer well enough to extend the deadline.
There is no point in spoiling a relationship with a good customer if it’s an isolated case. One thing to keep in mind is that your main responsibility is your own business so you will need to be tough on late payment if the situation drags on for too long.
Take action
Finally, if you seem to be getting nowhere in your demands for payment and all avenues seem to be closed, then it’s time to take action with your late payer. Remember the law will be on your side and you can issue a claim for the money owed plus interest.
The Late Payment of Commercial Debts (Interest) Act 1998 gives you the legal right to charge 8% interest on the money owed when a business is more than 30 days late paying your invoice. If your customer still refuses to pay then seek help with debt recovery to ensure that you are acting within the law when asking for the debt to be paid.