7 June 2018
Why your customers pay late and what to do about it
'Why hasn't that customer paid yet?' This is an issue faced by many self-employed people. Although there are various possible causes, luckily there is a solution for all of them. Let's consider the main issues.
Your customer doesn't keep on top of their admin
It's never nice when a customer pays late, but the cause is often quite innocent: a lax approach to admin or forgetfulness. You should therefore keep a close eye on your invoices and their due dates, using invoicing software, for example. This will enable you to monitor all of your payments easily and send timely reminders.
Extra tip: make a list of customers who are usually late with their payments. Then you can anticipate it and reduce the payment term, if necessary. Or schedule an extra payment reminder, with a quick phone call for example.
Your customer wants more time
It's likely that your customer just wants some extra time. If they notice that you don't complain about it, they may think you don't really mind.
Even though it can be a difficult subject to broach, you should still talk to your customer about it, especially if the problem occurs regularly. Ask your contact person whether the agreed payment term is too short. Then try to find a compromise to suit both parties.
Your customer has financial difficulties
It is even more unpleasant when your customer is actually unable to pay due to financial difficulties. In that case it's up to you to decide how far you want to go to receive the payment quickly. Is it a small amount from a loyal customer? In that case, you could turn a blind eye and continue to be patient. However, you must make sure that customers do not take advantage of your leniency.
If you think the amount is too high for you to wait long and you just want to get paid as soon as possible, send a payment reminder in writing by recorded delivery. If that doesn't help, you could hire a debt collection agency. But remember this comes at a price and could damage the relationship with your customer.
Extra tip: check your customer's financial situation before doing business with them. Try to find out about your customer's ability to pay on time by talking to them individually. Consult your customer's financial accounts at the Central Balance Sheet Office of the National Bank of Belgium. Business information offices such as Graydon and Dun & Bradstreet could also help.
Your customer does not agree with the invoice
Invoices are contested every day, but often only when the creditor, sends a reminder.
Openly ask your customer why they do not agree with the invoice. If they have a good reason, you could waive the full amount, or part of it. To do so, you will need to draw up a credit note. It is always a good idea to investigate this by talking to your customer directly. No one wants to enter into expensive legal proceedings, which cost a lot of money as well as time.
Extra tip: Go and see a lawyer or legal adviser as soon as possible to have general terms and conditions drawn up. These can contain clauses about liability, payment terms and any applicable charges in case of late payments. Always enclose the general terms and conditions with every quote or purchase order that you send to a potential customer. Do not do any work/provide any services until the customer agrees with the quote and the general terms and conditions by signing the documents.