The dreaded late payment. It’s something almost all American businesses have to contend with from time to time, some more than others. And, for those businesses that have a lot of late payments, they have the power to utterly destroy their business if the problem isn’t solved. Fortunately, there are things you can do to discourage late payments from happening, keeping things from ever getting to this point.
The Sales Contract
First things first, always require your new customers to sign a sales contract. This should happen before they receive any products or services. In this contract, be sure that you carefully outline all payment terms, what will happen if a payment is made late, and different options for making payments. That way, you’ll have proof, no matter what happens, that your client agreed to your terms and promised to pay you for your goods or services. This can really help you in the event that you end up having to go to court. But, with the reminder of this contract looming in the client’s head, there’s a good chance things will never go that far.
As mentioned, your contract needs to include your payment terms, and this is definitely a section of the contract where you want to be as specific as possible. The most important things to include in this section are the dates when payments are due, as well as when late fees and other punitive actions will be applied and what they are.
Remind, Remind, Remind
Having an airtight, carefully laid out sales contract is just one half of the “getting paid” equation. Your job is not done once the contract is signed; in fact, it’s just beginning! For best results, send payment reminders a week before payments come due, and, while this reminder should be friendly, don’t hesitate to include a reminder of what will happen if payment is not received on the due date. This should help toward debt collection and recovery, and, on the off chance that that doesn’t happen, be sure to send reminders regularly, escalating your tone and the implications of not paying each time.
Unfortunately, even if you follow these tips perfectly, you’ll probably still have some late payments or unpaid payments. But, the good news is that, by following this advice, you can greatly reduce the number of late and unpaid payments you acquire. #DebtRecovery