Running a business is hard. There are a million and one things to think about every single day and your focus should always be on how to improve and thrive. Unfortunately, late payments can throw operations into disarray and through no fault of your own. It’s one of the most frustrating elements of business and something most firms deal with.
A shocking recent survey has shown that half of SME owners in the construction sector have suffered very real repercussions because of late payments.
So, with all this in mind, let’s look at how you can bring your number of late repayments down.
Research & Vetting
Bringing in new business is always a great feeling, but don’t jump in with both feet. Take the time to learn about your new prospective client, and start researching as soon as they reach out.
Look at things like credit reference agencies, but also go deeper and find whatever information you can about the new prospective client. When you’re armed with the facts, you can make an informed decision on whether this is a firm you want to do business with. It’s a simple point, but one that can offset a great deal of stress later.
Be Clear on Payment Terms
It’s a funny fact of business that some people feel like they are being too heavy-handed by being upfront about expected payment terms. But it’s important to push this aside and be crystal clear and transparent about when you expect to be paid.
Make this part of your process when talking with potential new clients and everyone will know where they stand. State this information clearly on invoices and other agreements, and there can be no excuse for late payments.
Don’t be Scared to be Firm
When a client is late with a payment, the temptation is to be understanding and accommodating, but this isn’t a credit-lending situation and that unpaid money is yours by rights. You need to be ready to state, firmly and clearly, that you expect payment by a specific date or you will have to re-evaluate this business relationship. It’s not nice but businesses don’t run on promises, they run on money.
Incentivise Prompt Payment
Many businesses mitigate late payments by making prompt payment more attractive. Usually, this in the form of a discount for payment on receipt or within an agreed number of days. Obviously, you don’t want to cut your margins down too much, but this is a great way to show customers your value prompt payment and avoid lengthy delays.
If you’re seeking finance for your business, get in touch with GIC Capital today. Offering a range of finance solutions, GIC Capital works with you to find the perfect solution for your needs.