Accounts Receivables Management: How Do I Deal with A Late-Paying Customer?
Facing issues with receiving late payment and unable to manage late-paying customers? Well, the situation isn’t alarming until it becomes fear for life. How? Generally, if you don’t focus on tackling the payment process in the first place to one customer then you will become habitual with every second customer. And, this way customers will delay or avoid paying you if you don’t have records maintained.
However, piling up the problems might lead you to major risks. Thus, here are some tips that will help you say goodbye to late fees. Walkthrough this blog to know the account receivable management process. Let’s start!
Common Reasons Receiving Late Payment
There must be a glitch that makes you face problems. Likewise, when you are receiving a late payment, the reasons can be counted as below:
- Sending a late invoice to customers
- Incorrect invoice shared
- Mis-matched records billing
- No fixed date and time for payment
Solid Tips To avoid Receiving Late Fee for Accounts Receivables Management
These tips will rescue from late-paying customers not once but for your entire business journey:
- Get Organized
If your start is organized without any tangled process, the late fee issue will never arise. Whenever you start your business you should have your late fee policy mentioned in your invoice. Thus, the customers will be aware of the consequences of the late-paying fee structure. This can probably be done best with automated invoices. The most recommended online invoicing software by the business analyst is Invoicera which has amazing features at a reasonable cost.
2. Use Incentive role
Well, providing incentives can attack two targets with one arrow. Thinking how? The incentives plan is in your control. Thus, creating incentive plans will build a moderate-term, and also you will get to know the seriousness of payment processing. This will help you to change the approach of account receivable management services accordingly.
3. Build-relation
Building relations with the customers helps you build a chain in the market. This helps in gaining trust and importance. You simply have to be connected with your customers on different social platforms. Wish them on festivals, special invitations. These behaviors indicate a bond being developed. Customers will then keep you at priority and will pay their bills on time. There’s a saying ‘little hinges swing big doors’ which means at times small things can make a big difference.
4. Friendly-reminder
Why waste days waiting for your payment? Just shoot a friendly reminder regarding the payment due. In such reminders, the customer will not feel offended and you will get to know why the payment is stuck. This way you will also get notified if there’s any mistake from your end. If there’s any you can work on that without wasting time to get your payment early.
To avoid such mistakes, it is better to use automation, account receivable management software that will help you manage online invoicing and maintain all your cash flow management without any human error. Thus, the reason for late payment will not be from your end and it will reflect professionalism.
5. Use Late Fine Policy
The policy is meant to be implemented because if you become liberal towards the payment policy your customers will take you for granted. To deal with the late-paying customer you need to apply a late fee charge to them as mentioned in your policy. Next time they won’t repeat the late payment mistake again.
6. Stay Professional
Understand this point in this way- there are branded as well as local products. Just remember, when you buy the branded product there are no if’s and buts regarding the price in order to conduct a smooth accounts receivable management. However, when we talk about local products people take it casually and try to bargain, and can communicate in a low manner. Same way, being professional creates a higher impact rather than being clumsy.
7. Collection Call
If your reminder message doesn’t work then you should make a collection call. Many times the customer forgets about the payment. No issues, you can connect via phone call and make him remind you about the payment. I know it’s sad when your clients forget your effort but you need to control emotions and focus on hard-earn cash.
8. Prepare for Excuses
Different clients will have different approaches. Some of them value your work and credit the payment on time whereas some clients are a miser and thus, they will make excuses every now and then. You need to be prepared for such talks and never overrule them in terms of payment. Your conversation should be such that you are proving to your customer there’s no way to escape.
9. Installment Plans
There are customers who may be running through some financial hardships in order to avail accounts receivable management services. You should understand their situation and smartly allow them an installment payment plan. This will help you not lose your client and also your payment will be run by the customer without any delay.
10. Interesting plans
Playing with marketing plans smartly will help you receive payment early and also increase your customers too. While discussing the quotations and payment terms and policy you can also add the reward points for those who pay early. This helps in giving a push to pay. You can provide a discount on a particular date margin.
These were some basic tips that will help you tackle late-paying customers. Now, we will explain the entire stages to deal with late payment.
3 Stages to Handle Late-Paying Customers
Everything has stages that must be followed to avoid any misleading or loss. Similarly, here are 3 stages to deal with late-paying customers:
STAGE 1
Advance Reminder Text
Many startups or new business owners appreciate a reminder message regarding their upcoming payment. Create an email mentioning all details of the company’s name, business deal, payment details with a warm message that the payment date is near.
Follow Up
If the due date is near and you haven’t received any revert, you need to take follow-up. Send the email asking ‘Update’ regarding the payment process. There might be chances that he had failed to check your advance reminder text.
Communicate Internally
There might be chances that the customer has already been in touch with other team members and you aren’t updated. You should have account receivable software CRM features that are automated. This will help with every update in regards to interaction with customers and the current status.
Stay Cool
Never panic. Losing control will worsen the case. Stay calm and cool without creating any hassle.
STAGE 2
Telephonic Follow-up
If there was no payment update then you must connect directly via telephonic call. Now approaching through calls becomes important. There might be reasons that they won’t be replying to your mail (you must think positive). Thus, call the customer and ask about the payment process.
Know the reason for the delay
Call your clients and know the actual reason why your customer is delayed. Is there a genuine reason for the delay or they are not paying attention to the payment process.
Negotiate
Dealing with customers patiently will help you have good relations. If they are unable to process the payment as discussed try to negotiate or explain to them installment plans.
STAGE3
Red Alert
This is the stage where you will have to take outsource help i.e. Small Council court. If your client is not accepting that there is a payment delay or not agreeing that they are their customer then it’s red alert time. Approach court as soon as possible and get it resolved.
Conclusion
There will be no change of red alert situation if you have the entire record. For this, you should have automatic invoicing and time tracking software that helps in keeping the record. To be more securely embedded for your data and records choose Invoicera software. It will not only help in the account receivables management system but has fourteen features along with it. The data is saved on the cloud, thus no chance of threat.
