collect payments

7 Techniques to Collect Late Payments from Customers

BUSINESS FINANCE

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There are some defaulters in the list of customers who hesitate to make on-time payments. If you are dealing with these kinds of customers, then this article would be quite helpful for you. Usually, the small business owners deal with the growing unpaid invoices. The biggest reason for delayed payments is the delay in sending the invoices. If you want to manage the accounting system, then you should choose automated accounts receivable solutions.

Here, in this article, we will discuss different techniques to receive payments from the late-paying customers: 

1. Mentally Prepare Yourself

It is imperative to collect payments at the right time. Late-paying customers can make different excuses to delay the payment. You should adopt a friendly technique to collect payments and stay firm. If you do not adopt a friendly technique, then your customers will walk away. You should prepare yourself and create a good plan to deal with customers who delay in making payments. Also, you should invest in the receivable solutions.

2. Start Taking Follow Up

You should track the account receivables and maintain records of everything. You should keep a record of those customers who failed to make payment before the deadline. You should invest in good accounting software that can help in maintaining the record easily. Moreover, it can help you to create a good strategy to collect payments from the customers who are going to delay the payment. A good system for follow up will encourage the customers to make payments quickly. Also, you should take help of the accounts receivable problems solutions software to manage the cash flow.

3. Send Reminder Message

Create a polite reminder message and send it to those customers who have failed to make payment before the deadline. You can send the reminder message by text message or email. This can also be done through the accounts receivable automation software. Also, it is a good idea to send the reminder a few days before the deadline. According to the survey, customers take it who receives reminders to make payments instantly. You should create standard letters that you can use in different situations.  

4. Call Your Customers

If the deadline has passed away and you have not received payment even after sending the reminders, then you should call your customers. It is not easy to ignore phone calls. Moreover, if you call your customers personally, then there is a probability that they can share the actual reason for delayed payments. You should use accounts receivable portal to keep record of customers who failed to make payments before the deadline.

5. Use Good Language

All business owners should try to retain their customers for a long time. You should always use good language and try to convince your customer to make payment for the services or products they have purchased. Also, you should look at different ways to find out the solution to the problem. You should look for different to get paid for the products and services you are selling. Some of the most common ways are described below:  

  • All business owners want to get their money back. The best way to receive money is to offer an installment plan to your clients. The installment plan is one of the best ways to get back your money. If someone cannot pay a big amount instantly, then you should allow them to pay back in a small amount. 
  • You can also ask them for upfront money. If you get some payment at the start, then there is a surety that customers will make the complete payment. Therefore, you should ask the customers to pay some amount before getting the products or services. 

6. Hire Lawyers 

If you have tried all the other polite technique to collect the payments and customers has not paid yet, then hire a lawyer. It is time to take legal action against the defaulters. You should ask the lawyer to write a demand letter. The demand letter is a certified letter to threaten your client with legal action if the payment remained due for a long time. If any customer who is not scared by phone calls, the he will be often scared by the demand letters sent by the lawyers. 

7. Hire A Collection Agency

You can also take the help of a collection agency. Before hiring a collection agency, you should take advice from a lawyer. This is another stringent method to collect payment from customers. Usually, the collection agencies charge you a few percentages of the recovery money. Sometimes, they can buy your debts and manage the collection amount without any problem. In some cases, you will only get some amount. It is recommended to weight the possible outcome. Hiring a collection agency should be the last way to collect the amount.