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Late Payments: How to Prevent and Handle Them

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The prevention and handling of late payments are easy if you:

– Build a scope of services that outlines the exact terms. 

– Find out vital collection info ahead of time, such as whether purchase order numbers are required or whether the company is farming out its accounts payable to another firm.

– Transmit invoices promptly and without delay; use electronic means whenever you can to maintain the “paper trail.”

– Be precise in your use of language. Consider terms like “Pay by” instead of “Net 60.” If you charge late fees, make sure that this is clearly stated as well. Maintain proof of any and all communications. This includes emails, contracts, and invoices, as well as unsuccessful attempts to receive a payment.

Late Payments: How to Prevent and Handle Them

Late payments are a common issue for businesses of all sizes. There are steps you can take to prevent late payments. The tips below will help you do so and also give you some ideas on how to handle them if they do occur.

Tips to Prevent Late Payments

No business owner will be lucky enough to experience customers who pay on time all the time. It would be nice if that were the case, but this is the reality that we’re talking about here!

Still, how you approach your collection process can make all the difference in cutting down on delinquent accounts or eliminating them altogether. To ensure that you keep getting paid in a timely manner, do the following.

Craft a contract or statement of work that will outline the payment terms for your invoicing needs. If they are utilizing an online solution provider, make sure to obtain this information prior to sending out an invoice and to ask the company about any specific requirements on how they want to receive invoices for prompt payment!

You want to remove any obstacle to payment that the company might try to place in your path. Most late payments are not done maliciously, but it’s good to have the clarity upfront in case you are ever forced to pursue legal action of any kind. Otherwise, you could be at the mercy of a non-paying customer.

And 5 Tips to Handle Late Payments

So, you have done all that you can to prevent late payments from happening. You are having some major successes, but some are still getting through. Not to worry. Here are the steps that you should be taking along the way.

  • Keep records of all correspondence, invoices, contracts, and attempts to obtain payment in case you need legal recourse later on down the road.
  • You can send a reminder email or make a phone call once the payment is overdue. Be polite but firm in your request for payment.
  • If the above methods don’t work, you can send a certified letter with the return receipt requested so that you have proof the debtor received it. This document can be used in small claims court if necessary.
  • You can also hire a collection agency to collect the debt for you. Make sure to do your research on collection agencies before hiring one, as some have shady business practices.
  • If worst comes to worst and you need to take legal action, you can file a lawsuit or small claims case against the debtor.

Late Payments Should Not Be the Norm for Any Business

Late payments are unfortunately a common issue for businesses, but there are steps you can take to prevent them and also handle them if they do occur. By being proactive and taking some simple precautions, you can avoid many issues related to late payments. And if a late payment does happen, there are several options available to help you recoup the money owed to you.

If all this seems like a bit much for your small business to take on, you are not alone. Southwest Recovery Services has helped many businesses of all industries and sizes get the payments they deserve for many years. Our goal is to make sure that cash flow never becomes an issue for your company. Call or contact us online to see how we can help with your specific situation.

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