Dealing With Customers That Won’t Pay Their Invoice

Cash flow problems are one of the biggest issues for new businesses and if you can’t manage your money well, you are not likely to survive. Sometimes, cash flow issues arise because business owners are reckless with their spending and their outgoings exceed their earnings. But it can also happen because customers are not paying their invoices on time. So, you are paying all of your overheads and you have customers, but you still don’t have money coming in. Most of the time, customers will be happy to pay on time but you will always get some people that try to get out of it. It only takes a few difficult customers to land you in financial trouble, so you have to deal with the issue right away. Here’s how to deal with customers that don’t want to pay.

 

Dealing With Customers That Won't Pay Their Invoice


Send Clear Invoices

When people don’t want to pay, they will look for any excuse to challenge the bill. If the invoice is not very clear and you don’t have a breakdown of exactly what they are paying for, they may claim that you are overcharging them and use this as a way to avoid paying. That’s why it’s essential that you send clear invoices that outline exactly what they are paying for and when the payment is due. Keep a copy for yourself so they can’t argue with it. You can use this template if you are not sure how to write a proper invoice. Make sure that you send it out immediately because the sooner they get it, the sooner you will get paid. 

It’s also important that you keep a good record of all quotes that you have given them, and get them to agree to the price in writing beforehand. That way, you have proof that you are charging them the right amount if they try to question it. 

Use Invoice Factoring

If people are not forthcoming with the money, it can cause a lot of problems for your business, especially when you are just starting out. You may be relying on payment from one client to keep your head above water until you can find the next one. If they don’t pay, the whole company is at risk. That’s why it’s a good idea to use an invoice factoring service to make sure you get your money. As soon as you invoice the customer, they will pay you 90 percent of the money. Then they will collect from the customer and give you the final 10 percent when they do. That way, you always get the money straight away and you can avoid any serious cash flow issues. 

Chase The Debt

This sounds obvious but a lot of new businesses are afraid to chase people up. When you only have a few customers, you don’t want to alienate them and lose their business, so a lot of new business owners decide to just let it slide for a while. But if they are not willing to pay up on time, they are not the kind of customers that you want for your business. If you let it slide once, they will do it again next time and they will make you wait even longer for the money each time. You need to get on the phone with them on the day that the payment is due, and keep chasing them up until you get it.  

It’s important that you don’t let people take advantage and you set the right example from the outset, so people know that they can’t get away with late payments. 

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