6 Step Checklist to Prevent Late Payments

June 9, 2022

People like to feel connected

It’s basic human need and it's as true in business as it is in our personal lives.  

As a professional service provider running a SME, being connected to your clients and developing those relationships is a crucial part of growing both your business and your pipeline. That’s usually reflected in how you deliver your service, too, showing your clients that you’re a business to be trusted. 

But money is important!

Having a positive cashflow and being able to pay salaries and other overheads is even more crucial though. So, what happens if a client, with whom you have a ‘trusted’ and easy-going relationship, hits your debtors list?

Protecting client relationships is often cited as one of the main reasons companies refrain from chasing payments. But if you’re not being paid, what use is that ‘solid’ relationship to your business?

Luckily, there is a way to ensure timely payments while protecting your business relationship.

Our finance experts find that these six points help to both prevent late payments from happening and solve any outstanding invoice issues that can creep into longer term debt:

  1. When you first get a new client, it helps to set expectations from the outset. Write a Service Agreement for them to agree and sign. Within that should be your Terms & Conditions and clear payment terms.
  2. Offering rewards for paying early or on time, such as a 5% discount or a voucher to a local restaurant, can really get results. Consider if you can include that benefit in your payment terms.
  3. Lack of communication often causes tensions, so dedicate someone on your team as their named person to contact. And be proactive at regularly contacting them, too, just to check in.
  4. Clients often feel ashamed about not being able to pay on time and may not respond to calls or emails because of that. Approaching them with empathy and understanding really helps. Click here for some ideas on how to chase payment without ruining your relationship.
  5. When your client admits that they’re struggling with cashflow, ask if they need to spread the cost and create a payment plan with them. Share the plan with your team to ensure that everyone knows the process. 
  6. Alternatively, if your clients are struggling to pay and not engaging in discussions about payment plans but still want work done, a tactic that often works is sending a message like this:
"We would love to do that for you and will do so once we’ve received payment for our outstanding invoices. If you’d like to set up a payment plan, please get in touch. Otherwise, we look forward to receiving full settlement within XX days."

If all else fails, you may need to seek legal advice. But there is another way…

The automated solution

You may already have accounts software in place, like Xero or Zoho. They’re great for sending out invoices and checking for payments, but they don’t have the unique software ability that Paycada does. 

Paycada uses superior communication technology. Its unique tracking facilities actually recognise customer payment and interaction patterns, allowing it to dynamically adapt its automated responses to get you the results you need – timely payments. 

Paycada easily integrates with your existing accounting software, too, so you hardly notice any difference.  

To find out how Paycada will help you maintain excellent customer relationships and get paid on time, get in touch.

Created by Paycada experts

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