Have you ever run into difficulty trying to collect payments for your services from clients? What happens if your client is late with payments or doesn't pay at all? If this is a regular occurrence for your business, you are certainly not alone!
Here are some steps that you can take to ensure that you get paid, without jeopardizing the positive relationship you have with your client:
- In order to prevent late payments from occurring, be clear with your clients about your payment policies and potential consequences for late payments.
- Use your original invoice to notify and remind your clients of the payment policies in place for your business.
- Track your receivables on a regular basis so you know when invoices are overdue, and take action right away.
- If you find it difficult to routinely monitor all accounts, consider hiring someone to monitor late payments and follow up with clients.
- Start by sending your client a polite and professional letter notifying them that a payment is overdue.
- If you still haven't heard from your client, follow up with a phone call.
- Remain calm while speaking with your client; the goal of your conversation is to determine what is preventing your client from paying.
Offer a payment plan
- If your client indicates that they are unable to pay due to lack of funds, work with your client to create a payment plan that is feasible for everyone. This will ensure you remain in control and receive all monies owed.
- Once a payment plan has been agreed upon, draft a written agreement which clearly states that if your client cannot make a scheduled payment, they are to notify you immediately.
Payment plans may include:
- Installments: Develop a payment plan in which your client pays a percentage of monies owed over series of months, until the past-due balance is repaid
- Partial payment: If your client is unable to pay invoice in full, and you cannot wait any longer for funds, consider accepting a portion of the money owed
- Bartering: If your client has indicated that they will be unable to pay for your services, but offers a service that your business could benefit from, consider entering into a bartering agreement to clear up debt
If your client still cannot meet your payment deadlines, it may be in your best interest to end your working relationship with this client. In certain situations, you may also choose to seek legal advice or consult with a collection agency, in attempt to recover monies owed to you.