No matter how big an organization you administer, non-paying clients really pinch you bad. Without a doubt, the impact on small and medium-sized enterprises is higher, because the cash flow starts to fall apart and it slowly causes a ripple effect on your business’s productivity.

You can chase your payments as much as you can, but sometimes some clients just don’t pay up. Plus, this also puts you in an awkward situation when you are stuck wondering, what should you pick - bothering your client ultimately endangering the future business, or let the overdue status be.

This is when you start feeling the negative consequences of not receiving payments, start questioning your business’s productivity, and think about how valuable these clients actually are to your business. But the most important question is, how to get your payments? Well, here are some tips to guide you through the process:

1.     State due dates explicitly
Heard of the proverb, “Prevention better than cure?” Exactly what my #1 tip talks about: To avoid the possibility of non-payment right from the start. Communicate payment due dates to your clients even before entering into the business deal. This can be done by mentioning them clearly in all the documents: Agreements, contracts, bills or invoices.

Write the date in clear, bold and simple language. Infact, my recommendation is to mention the deadline or timeline as soon as you deliver the products/services. Although it does not have any connection with how soon you receive your payment, but as soon as your client observes you strict with your timelines, he will hesitate to default them. Remember, communication is the key to follow this step.

2.     Offer punishments in the form of late fees
Well, not always the clients are intentionally delaying your payments, but having consequences for non-paying customers and clients acts as a disincentive. Exactly why punishments in the form of late fees on the event of non-payment can act as counterproductive.

But here is the catch: If you have devised a late-fees plan, offer your clients incentives in the form of discounts, in case they are making earlier payments. Remember, your end goal is to get your payment as early as possible, and this pro-tip has a proven history of success.

3.     Send reminders to non-paying customers
As soon as you notice the due dates are on the verge of failing, start sending reminders. This will come helpful in case your client unwillingly forgot to make the payment and a gentle reminder will serve your purpose. However, in cases where clients are willingly delaying, this would add the needed pressure on them. You can hire a professional debt collection company like cedars business services for this task. Visit their profile on Linkedin.  

Thus, emails, or texts, or the age-old method of snail mail (regular mails), it’s important to send reminders. However, my recommendation is that you address your client by his name in your emails or texts. A generic title like “valued customer” or something else will normalize the critical nature of the email. Plus, add the amount due, and also highlight all the important details in bolds from the transaction that took place. Afterall, there’s a reason why personalized emails 6 times higher transaction rates.

4.     Offer payment-in-installment to your debtors
History has proven, that something is always better than nothing. Thus, for the customers who are willing to pay, but cannot really pay up the entire amount, the freedom to pay in installments will prove to be a motivation. You can include some basic fee, or interest in the amount, as that is completely fair and legal. Clearly state the terms and conditions for paying the amount in installments, that is, how will you divide it, and in how many installments. These terms completely depend on your needs, your business’s needs and of course your industry. Companies like cedar financial works on such terms. They follow the People First Approach and function according to the convenience of people.

5.     Consider Invoice Factoring
Have you heard of invoice factoring? If not, here’s a quick explanation: It means selling your invoices to a lender, who would collect the overdue payments on your behalf. The lender will make a living by typically keeping 1-4% of the total amount. These lenders pay up 80% in advance even before he collects the debt and the remaining 20% post collection. It is not always that you have enough time, and resources to chase your payments – this is exactly Invoice factoring can come in handy.
Having customers and clients who do not pay up is a serious problem but that is what a business is all about - combating problems, looking for better solutions and emerging out better and bigger.