How to Handle Late-Paying Customers Without Hurting Your Relationship With Them
By Eleanor Wyatt, Remote Work Wellness
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At some point in your business, you’ll encounter a situation that will require you to pursue a customer to settle an invoice. Some of them may have forgotten to pay you, or you could have customers who habitually pay late or don’t pay at all. Regardless of the situation, while collecting payments, you must also remember this is a process of maintaining customer relationships.
When your customers fail to settle invoices, it creates cash flow gaps, which places unnecessary stress on the business. If more customers fail to pay their invoices, it can make equipment and vehicle maintenance, for instance, a challenge. However, chasing customers for payment can be awkward if you don’t know how to approach the situation. Here are some ways you can handle late-paying customers without hurting your relationship with them.
Send a Friendly Reminder
The first thing to do if you have customers whose invoices are overdue is to send them a friendly payment reminder. One of the ways you can do it is to write a polite, professional email after the due date. This lets your customer know the invoice is now overdue. In the reminder, highlight the payment date and also include information about the different payment methods they can use to settle the pending invoice.
Also, it’s a good idea to share a copy of the original invoice in case it was mislaid. In some situations, failure to pay an invoice can be because the client was out of the office and the invoice slipped through the cracks. Maybe it was lost in the many emails they receive every day, so a reminder would be a good intervention.
Reach Out to the Client
The next option you should consider is to call the customer directly. While addressing them on the matter, follow all customer service dos and don’ts to maintain a friendly theme. Speaking with your client will help you understand the issue behind their failure to settle pending invoices. To ensure you’re contacting the right person, check their information from the billing department. Your conversation can help you know the status of the invoice, including when they plan on paying the whole amount. Be a diplomatic communicator, and the client will respond appropriately.
Incentivize Early Payments
There are many benefits of incentivizing early payments. These include an increasing influx of cash as clients take advantage of the discount to settle their invoices. It motivates your customers to pay their bills and avoid paying late. You can use this as a way to increase customer loyalty, which helps your business grow. However, if you have a manual accounting system, it can be difficult to track early payment discounts. With software, you can create specific terms for your customers to ensure they get their invoices early and get reminders about the discount offer for any early payments they make.
Optimize the Invoicing Process
Manually processing your invoices requires a lot of work and can lead to many errors. To streamline the process, consider using software to handle all invoicing and accounting duties. This can also be useful in payment collection, making it easier for your business to get paid. With payment processing software, your business can accept diverse payment options from customers, increasing the likelihood of them paying their invoices early. ZenBusiness has a list of other essential business platforms and software here.
To ensure your business’ success, it’s important to embrace an approach that encourages your customers to pay all pending invoices. This injects cash flow into the business and allows you to stay on course with your business plan. These are among the ways you can pursue late-paying customers without damaging your relationship with them.