10 Fool-Proof Strategies to Avoid Late Payments From Your Clients
Late payments can be a big headache for any business owner, especially when you are starting as a small business owner or a freelancer. A survey shows that around 50% of business owners give up on their business in a year or two because of the late payments affecting their cash flow.
But nobody wants their business reputation to go down and tarnish especially when you are starting. That is why we have curated 10 foolproof strategies that can help you avoid late payments from your clients. One of the worst things that can happen to an entrepreneur is a late payment, particularly if they depend on that cash flow to maintain their firm.
These are ten practical methods to stop clients from making late payments.
1. Discuss the terms of payment from the start.
A general rule of thumb that everyone should follow when starting out as a business owner or freelancer is to charge at least 50% upfront before beginning work. It is preferable to develop criteria for creating clear payment expectations with clients. For example, if you are a product-based firm providing a subscription product, you should charge the customer prior to the product's first shipment. That way, you won't have to worry about being scammed or having your cargo returned.
Using e-invoicing software like Invoice Temple can easily automate your invoices based on the subscriptions and offers you provide to your customers. makes it simple to streamline billing and manage cash flow more effectively. Invoice Temple can send timely reminders if you or the client forgets about the payment!
This allows you to retain cash flow while keeping your firm going!
2. Follow Up Consistently
Following up with every client is an important step toward receiving money on schedule. While you can follow up in a variety of ways, including email, phone call, or text message via WhatsApp or Slack, keep in mind that you are only following up and reminding them about the payment. You should never be forceful with the client about payment; instead, give them a kind reminder. For example, if a client agrees to pay in a week or so, you can follow them up in 3 days to check in with them and ensure that everything is going according to the plan.
Staying in touch with your clients at all stages of the project is one approach to avoid late payments. Keeping them updated on the progress of the job will help them determine when it will be completed and when they should pay. As a result, people can plan for the money to be paid on schedule without feeling surprised or overwhelmed.
3. Send Out Timely Reminders
One simple approach to keep track of your invoices is to set up reminders. It's easy to automate the reminders using an online invoice generator like Invoice Temple.
Enter the details into the Invoice Temple software once and send out reminders as many times as you want. But remember NEVER BE PUSHY! You can also send them reminders through emails, texts, or by giving them a call.
However, if you have not received payment on time while sending out timely reminders, you can always take legal action if necessary, providing that all agreements and invoices are properly documented.
Our stand is to use invoice-making software like Invoice Temple as it can save you a lot of money, time, and labor! All of your data is completely protected and always safe with you because Invoice Temple is a cloud-based invoicing program!
4. Consistency is the Key
Late payments are not always the fault of either you or the client. You must be engaged with other tasks and distracted in order to send or receive funds on time. The greatest method here is to be consistent, sending out timely reminders and regular follow-ups!
5. Reward Your Clients For Early Payments
Who doesn’t love rewards? Whenever your client pays on time, provide them a little reward, such as a freebie or a discount for early payment. It's a win-win for both you and your client because they receive an incentive while you receive your payment on schedule!
Some examples of the rewards would be offering a freebie along with the goods they purchase, providing them with a free resource such as an ebook to guide them further in their business journey, or a 5% discount if they pay within 24 hours after sending out an invoice.
6. Impose Penalty Fees
If you believe your client is not taking the payment or your business seriously, you can always charge a penalty fee if the payment is late after the due date. It is perfectly acceptable to impose a penalty because you have spent countless hours focusing on the client's demands and growing your company. You never want it to be in vain, do you? So, if someone fails to pay on time, never hesitate to levy a penalty.
However, make sure that you included the penalty costs in the agreement or while sending out your sales invoice in advance. That manner, the client cannot refute the penalty fees and must pay them along with the necessary amount.
7. Stay Organized
Being organized can save you from a lot of mess in the future. Treat your business like a business. Never mess it up with other personal items. Make sure you follow a system for sending out invoices and receiving invoices and make sure it’s an easy system to follow. Do not complicate it as you may be finding it hard to follow the system you created.
That's when online invoicing software comes in handy. It does most of the job for you! All you have to do is enter the required elements, and the software can send out invoices, follow up and set up timely reminders for your clients to pay. it’s due on time and you’re proactively following up with customers if they are late.
Being organized doesn't only make the job easier for you, but also increases the transparency and trust between you and your clients. You can also keep a track of the money that’s coming in, going out, and the money that’s yet to come.
8. Offer Different Payment Mediums
The easier you make it for your customer, the more likely that you get paid on time!
When you are receiving payments, do not just think about the easier way for you to receive payment but also the easiest way for your client to send payments on time. Being considerate of your client and providing them with multiple payment gateway options in the invoice via a “click to pay button” or invoicing software like Invoice Temple makes it so easy for them to make the payment on time. The client can choose from a lot of different options like a credit card, debit card, or UPI to make the payment.
Also, when a situation arises when the only payment that you provide is not functioning properly, your payment gets delayed. And you don’t want that to happen, do you? Offering different mediums for payment so that even if one is not working, there is another way for the client to complete the transaction smoothly.
9. Be Courteous
No matter what the situation may be, never be unprofessional or uncourteous to your clients. Maintain a professional stand always with your clients even if your payment is delayed way long after the due date.
If your client is not paying on time, one genuine reason for that would be simply that they don’t have the money to pay you now. Be understanding. Give them enough time to sort it out themselves if you find their reason for delayed payment is genuine. They must have some cash flow problem happening in their business just like you. No matter what is going on in their lives, you are unlikely to be able to change it by being furious with them. As you face these problems, be polite and understanding, and maintain a cheerful attitude.
By being nice and understanding with your clients, you may construct a positive image with them and build long-term connections.
10. Make It Easier Through Installments
Customers are more likely to pay an invoice on time if they given multiple options. If they are unable to pay you in whole, you could offer payment in installments.
This can help in two ways. First, it permits cash to flow throughout the project. Second, it allows your clients to pay in modest increments rather than all at once.
Takeaway
In business, there’s no smooth road to take up. You’ll come across difficult clients in your journey. The key to handling them is knowing how exactly to handle them with patience.