Running a business is by no means easy, but some principles remain straightforward. You expect to be paid for the services or goods you provide.
Unfortunately, this doesn’t always happen. A client may be delayed in making a payment or may try to avoid paying altogether. When this happens once, it is bad enough, but if it happens multiple times it can place your company in jeopardy.
How can you encourage clients to pay on time?
Get the contracts right
In business, all parties need to know where they stand. The best way to do this is via well-drafted contracts. A contract can outline the precise goods or services to be provided, payment expected, due dates as well as late penalties for non-payment. Sometimes, non-payment occurs simply due to a misunderstanding, and sound contracts are a good way to avoid this.
Automated payments
Nowadays, it’s quite easy to set up automated payments. This can be especially useful for clients who use your business regularly. Rather than one-off payments, you may consider setting up automated monthly payments or subscriptions for your services. This way, non-payment should be less likely and should a payment not go through, you can spot this quite easily.
Apply discounts
Discounts for early payments are another useful way to balance your books. Everyone likes a good deal, and offering a small discount for early payments is a win-win. The client pays less and you miss out on the costs and hassle of chasing up late or missed payments.
If a client is refusing to pay, you do have options. Seeking legal guidance will give you further insight into the collections process.