As a business owner, you have to accept that some bills you issue to customers won’t get paid. Although bad debt rates are low, they can be annoying when they happen. It makes you feel angry, frustrated and disappointed. After all; when we use a product or service, we don’t expect it for free!
The sad truth is that some of your customers will be terrible at paying their bills. Sometimes, it’s easier to write off bad debts instead of spending time chasing them. Have you ever wondered why some of your customers are so terrible at keeping on top of their bills? Here’s an insight into why your customers aren’t paying you:
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You aren’t setting a clear credit policy from the beginning
Customers don’t always ask what their credit terms are when they buy something from you. If you don’t make it clear what they are, they’ll assume your invoice is a low priority bill. That’s also the case if your customer happens to be a large company or corporation.
It’s crucial that you state your specific terms even before you invoice them. That way, there will be no confusion over when you can expect them to pay you.
You aren’t chasing them for payment
When you’re busy running your enterprise, you seldom have the time to be a credit controller. That means you can’t spend all day on the phone chasing customers for payment. Sure, some accounts software can automatically send out reminder letters. But, if you forget to send them out, it’s a useless feature to have!
You should work on a reminder system that is both consistent and brings results. Some people even offer customers an incentive such as a discount if they pay early.
Your language is too soft
Yes, you should always be polite to your customers and never rude. But, there’s nothing to stop you adopting a firm approach towards chasing payments.
For instance, let’s say that one invoice is well overdue for payment. You’ve sent reminder letters and tried calling your customers. Alas, it seems it is all to no avail. You should adopt a firmer tone when extracting payment for overdue invoices.
One example is to have a firm like Sheehan & Co Solicitors & Lawyers involved. They can send out what’s known as a “letter before action” to your customer. When they see a letter from a lawyer demanding payment, the majority of late payers will pay up!
You offer shocking service
It’s not uncommon for people to withhold payment if they get poor service. When someone pays for a product or service, they expect it to perform as advertised. If the results are less than reasonable, they can put the invoice into dispute with the supplier.
If a lot of your customers are withholding payment for that reason, you’ve got a problem. You need to determine why your service is so bad and how to put it right. And, of course, you must make amends with your customers for damage limitation purposes.
I hope today’s article has shed some light on why you’ve got late payers. Thanks for reading it; see you soon!
