It’s easy to get lulled into a false sense of security with your customers – your best ones in particular. But if you don’t keep an eye on their payments it could be a disaster for your cash flow and in some cases it can spoil the relationship you have with your customers.
Often in a business that relies on regular monthly payments from clients, business can tick over quite nicely. Those regular payments soon become the lifeblood of your business and you come to rely on them to sustain your operation and help it grow.
Sometimes a customer may miss your demand for payment. If your company accounts people are keeping a close eye on things, then a few follow up demands will usually do the trick, however if you don’t send out invoices on time or keep an eye on the dates when payments are due, then debts can mount up and your customer may lose confidence in your service.
If there is one thing worse than being in debt as a business, it is having customers paying you late, or neglecting to pay you for months at a time. If you find yourself in this situation, then it is important to review your procedures and ensure that a) you send out your invoices on time and you don’t offer to extend lines of credit to your clients and customers without good reason.
A few friendly reminders of overdue payment will be sufficient in some case whereas in others you may need to take action to recover the debt if raising your concerns with your customer hasn’t worked.
According to current statistics, the average time period for making a payment is 70-75 days from the date of invoice. To limit the effects of late payments make sure that you inform your customers of the date when you expect to be paid.
Remember, customers who fail to pay on time can seriously damage a business by reducing important cash flow.