Having trouble getting the money you’re owed? This article will provide some tips for getting your debtor to quickly pay what you’re due.
Business is all about give and take; you provide a worthy service, and your clients pay you your worth. That said, this ideal isn’t always met, especially during times like today, with the pandemic making payment a difficult subject for some.
Even prior to the pandemic, many businesses would end up with at least one debtor who refused to make a prompt payment. Naturally, this can set back any company in terms of business development. So, how can you get what you’re owed?
From implementing a follow-up strategy to serving a statutory demand, this article will describe some ideas for getting your debtors to pay their due. Take a look…
1. Be Clear on Payment Terms
First and foremost, it’s very important that your initial payment terms are set out clearly and in multiple places. For example, you should start by labeling any prices and deadlines in your initial sales proposal. This way, there are no surprises, and the client has gone in knowing what’s expected of them.
Then, you should always label what you expect in terms of payment in your contract with any new client too. So, when they sign on the dotted line, their payment options are listed.
After this, when the invoice is sent, it should be made clear here what the payment schedule and expectations are. You should be sure to always include a due date and payment schedule at this stage.
Miles Burke, a serial entrepreneur, even says that he knows someone who “sends meeting requests as calendar reminders to their clients when they send the invoices.” Whatever works best for you!
2. Have a Follow Up Strategy
Sometimes, it is a simple case of forgetting or lack of prioritization. After all, we’re all busy people, so reminding your debtor of their obligations may be all you need to get payment sorted.
Immediately following up invoices that are overdue is a good place to start. Wonder Legal suggests starting off by sending a gentle written reminder, a follow-up, and then moving onto more firm recourse. This could include a firm written demand for payment and then some phone call follow-ups.
By having a clear strategy in place, you should be well on your way to getting all your money in good time.
3. Ask For an Up-Front Payment
One of the main problems that crops up is that, once the job has been completed, the debtor may see payment as last on their priorities list—because of this, asking for an up-front payment – like 50 percent now and 50 percent after – might do the trick.
If you ask for an up-front payment, and the company pays this quickly, you can get an idea about how serious they are. The speed with which they do this may also reflect on how quickly they’ll pay after the work is done.
Not only this, but it guarantees that you’ll have at least a bit of funding to keep all your projects going month on month. Then, you’re not left in the lurch, expecting a huge pay-out.
4. Offer Repayment Schedules
You could even consider setting up a payment schedule throughout the work you’re doing for them. For example, give them a deadline for payment installments weekly or monthly.
For starters, this is a sustainable way of doing things for your business, as you’ll be bringing in regular pay cheques to keep things running smoothly. What’s more, it also means that your debtor won’t have to pay large chunks upfront. Instead, they can pay monthly, at the same time as their monthly client payments come in.
5. Enforce Deadlines
Being lax about your payment deadlines is a one-way street to never seeing the money. So, when the deadline comes around, don’t dilly dally; make it clear that you’re expecting payment and enforce this deadline. This should all be part of the follow-up schedule we’ve discussed previously.
6. Consider Implementing Penalties
One way to enforce these deadlines could be to implement penalties for non-payment. For example, you could levy interest after deadlines aren’t met. Or, you could implement lump penalties for missed payments over a certain amount of time.
Of course, these caveats must be labeled in the initial payment information you provide prior to contracts being signed, as well as on the contracts themselves. This ensures that your clients are aware, hopefully encouraging them to pay up sooner.
7. Accept Various Payment Methods
With so many different payment methods becoming commonplace these days, you can’t simply rely on BACs or cash payments. In order to make it as easy as possible for people to pay, consider extending your invoice repertoire to fit your client’s needs.
8. Serve a Statutory Demand
A statutory demand is a written warning from a creditor. According to Citizen’s Advice, it’ll usually state that “if you don’t pay your debt or come to another arrangement that’s acceptable to the creditor, they may start court proceedings to make you bankrupt.”
This is an official notice, so if you don’t repay the debt in full, or a different arrangement is agreed, within 21 days of the notice, your creditor can apply to make you bankrupt. This may seem extreme, but desperate times call for desperate measures!
9. Be Firm
At the end of the day, it’s your money, so don’t be afraid to be firm. Of course, remaining polite is important to potentially keep the client in the future if you’d like to. But don’t feel guilty for following up multiple times and demanding payment; it’s your right.
10. Hire a Debt Collector
If all else fails, hiring a debt collector or solicitor to retrieve any unpaid debts should be considered. This isn’t unreasonable, and you shouldn’t feel bad for doing so. You have provided a service or product, and you need money just as anyone else does – don’t forget this.
Getting Your Debtor to Pay Quickly Can be Tough…
As you can see, getting your debtor to pay you isn’t always easy. These are just some of the many ways you could implement to get your debtor to pay what they owe you.
That said, if you can’t seem to get the money, don’t hesitate to get the professionals involved. Whether it be hiring a debt collector or a solicitor, the choice is yours. Just don’t be afraid to fight for your money.
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