Dealing with Slow Paying Customers
If my customer’s are slow to pay me, how can I pay MY bills on time?
This question is being asked by more and more business owners, according to Experian’s Business Benchmark Report, as our nation continues to struggle through tough economic times. Small businesses employing one to four people are seeing approximately a 15% increase in delinquency. Companies with five to nine employees suffered a 16% increase in delinquencies, showing that it’s not just the small businesses of America that are suffering.
There is no one correct answer for every company with cash flow issues because there are so many facets to the problem and each company’s needs and business structures are different. Here’s a few suggestions on reducing the “Slow Pay Disease.”
- Avoid slow paying customers.
- Credit check all customers before working with them.
- Continuously monitor existing customers to watch out for downward trends or other signs of distress.
- Take the option to temporarily or permanently suspend their account.
- Carefully audit paperwork and perform regular billing follow up calls.
- Verify customer satisfaction with each order.
- Ask customers the anticipated payment time on this invoice.
- If the payment is late, call and make a friendly inquiry about the status of the payment.
- Promptly apply fees and interest charges to their outstanding balance per the agreement.
Remember, not every customer is a great customer, some of them may hurt your bottomline. It’s definitely worth it to have systems in place to make sure you get the right type of customer so that you don’t end up invoice rich and cash poor.
If you need help with credit checking customers or performing billing follow up calls to keep payments on time, please give us a call 1-800-727-3377. Our business development consultants can create a program to suit your needs.