If you do have some slow paying clients, how can you get them to pay up? You need to create a debt collection process for your business now, because the older a debt is, the harder it is to recover it.
1. Have a Plan.
The main thing is to have a clearly defined debt collection plan that is noted in your terms and conditions. This will allow you to act fast to ensure you get paid, and ensure your clients stay within your terms of trade.
Step 1 is to send an invoice.
Step 2 is to send a reminder invoice.
Step 3 can then be whatever steps you decide to take to recover your money.
You can choose to send a final invoice, or refer the customer to a debt collection agency after 2 invoices. The thing to note here is that your plan has to be strict. Don't deviate from it and don't make exceptions. By having a clear process in place, you make it much less stressful for yourself, because you can refer the customer to the terms and condition which they signed up to when they bought your products or services.
2. Be Punctual!
Get in touch with your slow paying client as soon as you can, and always keep them informed about what the next steps will be at each stage in the process:
"We will send you a final invoice in 7 days. next week. If we don't receive payment of that invoice within 3 days, we will pass the bill to our Debt Collection Agency. Once they have the account, they'll commence action. The bill will accrue interest, and if it still remains unpaid, it will move to legal action, where generally you'll incur legal costs..."
3. Ask for Deposits!
If you can ask for a deposit before you start work. It helps you establish how serious the customer is, and lets you see if they can pay their bills. It also means they're working to your terms from the start.
4. Take Payment However You Can.
Offer a range of payment methods. You can accept cheques, bank transfers, Paypal, credit and debit cards. The main thing is to get the cash you're owed. The more payment methods you offer debtors, the less excuses they have to neglect paying.
5. Increase the Pressure.
If you make sure the withdrawal of services or deliverables is included in the terms and conditions, you can increase the pressure the longer the invoice goers unpaid. If you offer an ongoing service, withdraw it if they don't pay up. Threaten legal action.
6. Offer a Payment Schedule.
If the client is having genuine trouble paying you, call them and work out a payment plan. We'd all rather have the full amount in our bank accounts, but it's still better than receiving none of it. Be sure to put the schedule in writing, and follow up on every payment to ensure the client sticks to the plan.
7. Debt Collection Agencies
Using Debt Collection Agencies are easy. You simply let them know the details of the debt, and they pursue it on your behalf. They only charge a fee if they recover a debt, and the fee is usually a percentage of the debt that is recovered.