There are two types of slow payers. There are two types of slow payers. First, there are those who are reliable and will always pay. These include large corporations or government contracts that often pay invoices using a net 30-60 payment plan.
There is also the slow payer, who can be very unpredictable in their payment. They will often pay only when collections are set up.
These two types of slow payers are essential to distinguish. You can handle the first type of slow payers if you’re prepared. However, the second type can be complicated to deal with and can cause severe damage to your service-based company.
Get an Ironclad Contract
A contract should clearly define the basis of your business relationship. A contract will help you avoid disputes and ensure that you pay on time.
If you have a good relationship with your clients, they are less likely to try to destroy that relationship by not paying on time. Keep in touch with your clients and share industry news. You’ll be appreciated by your clients as you build that relationship.
Stop Future Work Until Payment Is Made
The key to slow payments for this second type of slow payer is to stop working until payment is made. If they are on a deadline, this can work well.
In advance payment
You can often avoid slow payments by collecting payments in advance. This works well for many types of services, mainly project-based work, which doesn’t have an hourly component. Even hourly work can still be invoiced in advance and added to the payment.
Send invoices ASAP
Do not keep invoices. Instead, send them immediately after the work is completed or for the required time. You might lose the client’s attention and leave them without payment.
Invoice must include payment terms.
In addition to having terms in your contract, you should remind your client about your payment terms. This will let them know that you expect payment on time and what the consequences are if they don’t.
Get a Discount on Fast Payments
Because everyone loves saving money, offering discounts as low as 3 percent will get your client to pay you sooner.
Add a late fee
It is important to not charge a late fee to clients who are slow but will eventually pay. Even if they pay their bills late, you don’t want them to lose a trusted client. If you are confident that you won’t work with the client again, you can implement late fees.
Give a call
Clients who have not paid their invoices should not be ashamed to contact you. You should assume it is a mistake before calling, so you don’t sound frustrated or angry. It’s incredible how far a phone conversation can go in clearing up late payments.
Everybody makes mistakes sometimes in business. If we didn’t, we wouldn’t be humans. It’s all part of learning. You can learn from common mistakes in business. Get my free checklist, The 10 Most Common Business Mistakes.