How to avoid and address non-paying clients

Service-based businesses face a significant issue with payments; as most of their payments are via invoice, businesses find themselves acting as glorified debt collectors, chasing payments continually from every client. Cashflow is essential to every successful business, and unpaid invoices can be detrimental to managing successful cash flow and growth. In this article, we outline the ways to avoid unpaid invoices piling up, and how to confidently address loyal clients who are giving you the slip financially. 

Set firm invoice times

If someone handed you an invoice and advised you to pay whenever you felt like it, what would be the likelihood of you paying quickly, or at all? Time demands for payments are essential, as the expectation should encourage timely payments. To set the best time frame for your invoices, you need to consider what is reasonable. Too short of a time frame and you warn off repeat business, and too long results in missed payments. However, whatever your choice, the time frame needs to work positively for your cash flow. Reminders are also valuable, as some customers forget. With electronic invoicing systems, utilise set payment reminders before and after the due date, as friendly yet necessary follow-ups. 

Take a deposit

One of the best ways to ensure the final payment is to take a deposit. While most clients will feel put off by the idea of paying the entirety upfront, serious customers will happily oblige a deposit. Those who aren’t willing to contribute a down payment are often the ones who don’t pay the final bill, and these types of customers are the ones you should be wary of future engagement. 

Make payments easy 

It’s possible the reason your clients aren’t paying on time, or perhaps not at all, is simply due to the complicated payment system you offer. For some clients, paying by bank transferral or cash may not be convenient, due to their cash flow issues, for example. By providing multiple ways of making payment, the customer is more likely to find a method best suited to them, and are therefore more likely to pay quickly. 

For any electronic payment systems you wish to use, such as PayPal or Stripe online payments, regularly check the access links are working. Broken links to pay screens will deter your customer, and very few will report the issue to you. 

Don’t undertake work from people with outstanding invoices

Despite their declared loyalty to you, a customer who doesn’t pay isn’t a faithful customer at all. Before you take on any more jobs for this business or person, ensure they pay their outstanding invoice first. Reconciling unpaid accounts first isn’t an unreasonable request and alleviates large debts for both you and the customer.
For more information about how to avoid and address non-paying clients, give Sydney Accounting a call today on (02) 9810 3222.