Prevent late customer payments with these strategies.
Dealing with late customer payments can be challenging. According to the financial software company Intuit, a quarter of small business owners spend three to five hours a week invoicing and dealing with collections.
Here, Carol Frischer, a longtime billing and collections
manager for Los Angeles accounting firm Holthouse Carlin & Van Trigt, shares
three tried-and-true tips to collect in a timely manner.
1. Create a carefully written, legally binding agreement.
Stipulate in writing that interest will accrue on late payments. “This can act as effective leverage,” Frischer says.
Ensure you get paid on time with these tips.
2. Ask for customers’ credit card numbers.
Often, customers fail to pay on time not because they don’t have the money, but because they are too busy to write a check and mail it. That’s why business owners should ask for customers’ credit card numbers to have them on file. “If a customer is getting close to deadline, call the customer and ask permission to charge the amount to their credit card,” says Frischer. Most customers will agree to this to save time.
3. Accept partial payments.
“If someone owes you $5,000 and can only pay $3,000, take the $3,000 and then work with the customer to create a payment plan for the remaining $2,000,” Frischer says. If you hold out for the full amount, you may never get paid.