3 reasons clients pay you late

It can be a tricky business getting paid. You provide the service or deliver the goods and then a deathly silence. Late payers cause all kinds of problems from the issue of remembering to chase up to the serious matter of putting a dent in your cash flow. Whilst there can be many reasons why your clients are not paying you, here’s my top three (and what you can do about them).

I didn’t receive the invoice…

If you send out invoices in the post to clients, then you’re bound to have heard the excuse that your invoice has been ‘lost’. With the finance team working home that’s not surprising!! The larger the organisation the more likely it’ll happen as they’re dealing with so many invoices each day. It they don’t have the people and processes in place then their payables will be a mess too.

Make it very easy for your clients to pay you. Send invoices electronically – all systems, large or small, should facilitate this. They can also include a ‘click here to pay’ link too. Or collect via Direct Debit – its common practice and a commonly accepted in B2B.

Being able to resend an invoice at the click of a button will help too, particularly if you’ve got the person on the phone. You’ll know that they’ve received it, reducing the likelihood that they’ll pay late.

Make it simple for people to follow through on a process. If you don’t they’ll put off doing anything about it. Keep contacting them to ensure you’re always front of mind – systems should escalate the severity of message automatically for you.

Sort out payment practices

Some industries are notorious for late payment. This can be for all manner of reasons including receivables and operational ‘norms’. This can make it a real headache to try to get paid on time.

Some have clients that think it’s ‘OK to pay late’ and string it out for as long as possible. You can’t afford to have lax procedures in place. This only serves to let clients take advantage of what’s effectively free working capital.

Have a credit policy in place – and stick to it. Plus, make sure that clients are fully aware of what the policy terms are. Keep it as close to due-on-receipt as possible.

Businesses naturally prioritise invoices that are due sooner. It’s a fact that the longer someone doesn’t pay, the less likely it is that you’re ever going to get paid. And that’s a situation you want to avoid at all costs.

Have a system in place that allows you to keep a track of the worst offenders and be able to follow up regularly with them. A good system will track the trend of the expected payment days based on previous history. This will tell you who is getting better or worse. 

Eradicate disputes

It could be that there’s a dispute over the quality of the product or service. And that’s the reason they’re holding back. Or maybe it’s because they’re disputing the amount on the invoice.

So many problems come down to human error – particularly when invoicing is manually processed. For example, when billing for time there are many ‘weak points’ in the process where errors can creep in. Look at your own systems and pinpoint what errors cause most of the disputes happen. Then fix them. Always tackle the problem at source. The longer it goes on the longer it’s going to be before the money comes in. Take a hard look at the opportunity cost of missed invoicing, incorrect calculations and credits. This leads to frustrations on both sides. If you want them to bring in repeat business, you’re going to have to show them that you care about solving their problems. And to solve them fast.

Making sure clients pay should be a number one priority. After all, it doesn’t matter how good your sales are if the money isn’t coming in quick enough at the other end. It’s a major factor in why businesses go bust. It cripples cash flow.

So, if you’re going to successfully manage cash flow make sure your invoice processing in order. It’ll take a lot of the headaches out of being paid – and that means being paid on time.

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