Most business owners face an unavoidable non-paying customer at some point. It can be stressful to deal with these kinds of customers. However, eventually, you must do a follow-up until you get your money. This process can sometimes even require legal action.
If you have sent the customer payment reminders, called them, or sent follow-up emails and the customer hasn’t paid the invoice, there are some further actions that you can take.
Seek Legal Action
If you are a small business owner, you are probably afraid to seek legal action. Legal actions can be expensive and time-consuming. However, if there is a small business lawyer in your area, contact them. They can charge reasonable rates for just sending letters for unpaid bills. Sometimes the letters can be threats of legal action, which is enough to spur people into paying up.
Tell your customers that you will be filing a claim in the business court. Don’t let your customers take advantage of you just because you are a small business owner.
Let Go of Problematic Customers
Consider firing any problematic clients that are difficult to deal with. If you are a young company and struggling to make income, letting go of these customers might seem like a waste of revenue. However, you are not getting that income steadily anyway.
The firing process can be way easier if the client has terminated all types of contracts. They should be expecting your products or services to cease too.
Charge Late Fees
No customer loves paying a late fee. Therefore, having this fee in place will help prevent customers from making late payments. Ensure that all your systems are backed by policies or terms of services. For example, your terms of service might state that there will be a late warning for failure to pay for ten days, a late fee for twenty days, or even loss of services for a longer delay in payments.
There are many benefits of working with a collection agency. They take the burden of calling every late-paying customer. A collection agency is a company used by business owners to collect or recover payments past their deadline. Consider choosing a reputable collection agency to help keep your business afloat.
You won’t have to spend your time chasing after late-paying customers. Such customers tend to pay faster when they see a collection agency. Consider using the cannabis collection agency if you are running a business that specializes in medicinal cannabis.
Use Factoring Services
Factoring can help you when you are strapped for your money and unsure when a customer will pay. The factoring service can help you get the cash you need while waiting for your customers to pay.
The factoring services involve selling your accounts receivables to a particular company for a specific percentage of the account’s worth, typically 70 to 90 percent. You are then given the money in advance. The factoring service will help you get the money from the customers, cut their service fee, and send the remaining cash to you.
The Bottom Line
As much as doing a follow-up to get your money is essential for your business, don’t forget to focus on your existing customers. They are the ones more likely to spend extra money on your products or services. In addition to that, ensure that you tighten your invoice method, take legal actions and get the help of collection agencies whenever possible to recover your money.