Running your own business is tough. There are a lot of moving parts and there’s no one but you to keep track of them all. One area that often gets overlooked is how to handle late or missed payments from clients. Let’s take a look at some ways to make the process as frictionless as possible for both parties involved so that everyone can get paid on time.
Make the process as frictionless as possible.
By making the process as frictionless as possible, you can avoid unnecessary stress and help your customer pay on time. A great way to do this is by using a direct debit provider. This ensures that your client doesn’t have to manually set up a recurring payment, which they may forget to do if there are no reminders or notifications sent out before each transaction. Plus, it’s easy for you. Once your customer has signed up for recurring payments with their bank (which takes just a few clicks), all you need to do is make sure that the payment goes through each month without any trouble.
Tailor the payment experience around your customer.
When it comes to handling late payments and missed payments, you want to make sure your customers know what is going on as much as possible. For example, if a client who owes you $1,000 has not made a payment in three months and has no plans to pay soon, then it may be best to contact them by phone instead of email or text message.
If the client owes you less than $1,000 and they are still making regular monthly payments on time but has just had a one-time delay with their check (e.g., they were in a car accident), then an email should suffice.
These are just examples of how you can tailor the payment experience around your customer based on their needs and situation.
Don’t make it a one-way street.
If your client is late with a payment, you can’t simply keep stalling them. After all, they may very well be trying to do the right thing but simply forgetful in their rush of business and deadlines.
If that’s the case, then it’s important to respond as quickly as possible when you receive the payment to let them know that their check or credit card information has been received. This will prevent any further misunderstandings about what happened and why.
You should also make sure that your process for handling returns and refunds is clear and easy for both parties involved in order for everyone to be satisfied with the end result — especially because this will save everyone time on both ends.
Be in control of your cash flow
The second most important thing is to be in control of your cash flow. You need to make sure that you have enough money coming in for you to be able to pay all of the bills and expenses without having any financial surprises.
This means that you need to be working with a direct debit provider who can help you manage your customer’s payments, and give them a good experience using direct debit. It also means that you need to be careful about how much money comes out of your account on each bill date. If it’s too high then there’s a risk that some of it may not get paid until after the next bill date (which could mean even more unpaid bills). The best way for this situation is for your bank or an accountant to look after these things so that they don’t get forgotten.
There are a lot of steps you can take to make sure that your clients pay on time. The most important thing is to understand your customers and build a payment experience around them. This can be done in many ways, from tailoring the payment experience to automating direct debit payments or even offering discounts for early payments.