Keep Calm It's Only Money

At one time or another all businesses will experience customers that don't pay on time, and that can be frustrating!

What makes chasing outstanding invoices so difficult is that you have spent time getting to know your customer, you may have visited them in person, or built a relationship over the phone, and when they don't pay on time you can feel betrayed, angry or taken advantage of.
 
Straight away you are annoyed. You have given them your time and your product and in return they have insulted you by withholding payment. You begin to think it was planned, they see you as a pushover, or even that they are just plain stealing from you. But the truth is usually far less personal.
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Most often late payment is a result of poor cashflow from your customer. If they do not receive payment from their customers, they have no money to pay their suppliers. If your customer is an individual rather than a business, the same principal applies; if they receive an unexpected bill they may not have money to pay you until their next payday.

The most difficult part is staying calm and not getting angry. When you phone up and start yelling for your money your customer is immediately put on the defensive, which can result in them yelling back at you. That's when it really starts to get ugly!

Keeping a cool head when chasing payment is the most effective way of achieving your goal. You need to enquire about your payment, and listen to your customer's difficulty. It may just be an oversight and payment will be sent straight away. It may be that payment bounced due to an unexpected bill, but it will be with you within the week, or it could be that your customer has hit a real problem with cashflow.

When customers hit a real problem with making payment you will need to make a judgement call. Do you want to discuss spreading the payment over several months, resulting in full payment being received eventually? Do you want the product returned in part or in full to reduce or eliminate the invoice? Do you want to explore more unusual options for retrieving your debt, such as a trade of goods or services with your customer to the value of your unpaid invoice – if they have something you want.

If an agreement can't be met you may need to explore more serious options. Taking legal action is a last resort, but sadly it is sometimes necessary. Often receiving a legal letter is enough for customers to make payment without full proceedings commencing, but sometimes you have to go through the whole procedure.

Fortunately there are legal companies that specialise in debt recovery and their prices are pretty reasonable, so if you find yourself with no other alternative be sure to contact one of them to guide you through the process.

And finally, if you decide it is not worth pursuing, once the debt is six months old you can write it off as a bad debt in your accounts.

If you are struggling with chasing your customers for payment please contact jamie@jamiegoodenough.co.uk to discuss how I can help you.