5 Tips for Dealing with Late Payments Without Offending Your Clients
Sometimes a late-paying client is someone you never want to hear from again. After all, you could put the time you waste chasing the money you’re owed toward work for paying clients. However, even the best clients can sometimes miss a payment, whether due to an oversight or financial troubles. When that happens, you probably want to gently remind the client without burning a bridge.
There are a few things you can do to expedite payment without upsetting your clients. The first step is to remain calm and resist jumping to conclusions. That person you’re sure plans to never pay may simply have forgotten. It’s best to give each client the benefit of the doubt initially, only escalating the issue when you’ve exhausted every other avenue. Here are a few tips to increase your chances of getting paid without jeopardizing future earnings.
Use an Intermediary
Big businesses have billing departments to handle financial matters. The employees who interact with clients on projects are completely separate from the employees who collect payments. Smaller organizations often don’t have that luxury. For those businesses, having a resource that acts as an intermediary can give you the distance you need. Whether this is a coworker, an independent contractor who handles your invoicing, or a software solution like QuickBooks orFreshBooks, you can remove yourself from the equation and maintain good customer relations. Xero allows members to send statements that look as though they were sent from accounting, serving to remind clients of all of the payments they have due.
If you don’t have separate departments, your client very well may. Instead of sending yet one more reminder to your client, consider researching the number for the company’s billing department and make direct contact with them. Since their duty is to pay the bills, you may find they’re much more aware of what is going on. Better yet, when you first begin working with a client, ask about billing procedures and determine if there’s a specific person in charge of receiving invoices and making payments.
Make a Phone Call
If your invoicing processes haven’t yet yielded results, one of the simplest ways to solve the problem is also the most direct. Simply pick up the phone and call your contact at the company. Express concern that the invoice might have gotten lost along the way and ask if there’s any information they need from you to process payment. By defusing the situation, you’ll be able to avoid embarrassing your client, who will likely promise to check on the invoice and get back to you.
Unfortunately, even if your client is highly valued, there comes a time when you have to do the best thing for your business. Set a timeframe at which point you’ll stop performing additional work for a client, even if you’re working with project deadlines. When your client requests new work or receives notification your current work will stop, that client will likely work hard to resolve those payment issues. At the very least, you’ll avoid putting in even more work for a non-paying client.
Know When to Get Serious
Despite your best efforts, from time to time you’ll have no choice but to take a stance. Send a certified letter that issues a deadline by which “further action will be taken” if payment isn’t made. If the client is in the same state, you can try taking legal action to get payment, but turning the funds over to a collections agency may be the best option for your business.
Ideally, you’ll never have to deal with a client who doesn’t pay within a reasonable timeframe. When it does happen, it’s important to balance good client relations with maintaining a positive cash flow for your business. In some cases, you’ll have no choice but to burn bridges with nonpayers, but when you do, you’ll have the confidence of knowing you can shift your attention to businesses that pay their bills on time.