Having troublesome clients and having to chase overdue invoices is never a pleasant task for a business. However, discomfort aside, clients who fail to pay regularly can wreak havoc with business finances, not to mention causing big problems for a business’s budget, which can easily snowball.
If you’re looking for advice on dealing with clients you have who are difficult payers, or if you’re looking preemptively for advice should it happen in the future, here are your options.
- Ensure All Contact Methods Are Explored
If your business usually chases invoices via email, make sure you’ve also tried and exhausted all other methods of contact. There’s always the chance that an email may have bounced back, or that an email address is incorrect. Be sure to try telephoning and sending an official letter.
If you still do not receive a response, you can move to the next step.
- Consider the Bigger Picture
If you’re thinking about your next step, weigh up the pros and cons of all actions. For example, would taking legal action consume more time, energy, and money than the total cost of the overdue invoice itself? Is it worth it? You always have the option to let an overdue invoice go and simply choose not to deal with that client in the future. It’s a loss, but it may be a smaller loss than it would to pay for legal action.
- Look at Alternative Funding Options
Even if you eventually get through to a client to pay up, their delayed payment may cause your finances to run into temporary problems. Or worst case, you have to exacerbate the situation to take legal action against clients who won’t pay. All of this means that you might need alternative finance options to make sure that you don’t run into financial trouble while you’re waiting for the amount owed to you.
Taking out extra finances, such as a business loan from Become, can help you to remain financially stable until any client money clears, or to help your finances if you haven’t been able to collect the money owed to you.
- Take Legal Action
If you officially want to go ahead and set up a case against them, you should consult with a legal professional for advice. In the first instance, you should inform your client that legal action will be taken if they do not respond to your latest communication. Sometimes, this may be enough to prompt them into action.
Preventative Measures for the Future
To give yourself the best chance of avoiding issues with non-paying clients, you could try the following:
- Research new clients first. Look at their reputation as a business and trust your gut if anything seems off about their working behavior.
- Set up proforma invoices. This means orders need to be paid for before they can be officially placed, meaning money upfront.
- Set up official terms and conditions. Send all new client’s official documentation, which states invoice terms and conditions, so there’s no misunderstanding regarding payment.
