Tue 21 Oct 2008
Tips for Keeping Non-Paying Customers at Bay
Overdue payments, non-paying customers... we hate to think of it, but it's a fact of life for small business owners. What can we do to ease our woes? Well, as the old saying goes....the best defense is a good offense.
Here are four proactive steps to help you keep non-paying customers from affecting your bottom line.
Include Step-By-Step Collection Procedures In Your Business Plan
Decide ahead of time how you will handle overdue payments and non-paying customers.
Spell it out in your business plan, so you'll have a specific step-by-step plan to follow when you need it.
Get Your Customer's Promise To Pay In Writing
This may seem a bit elementary but, in fact, business owners quite often get taken by people they deem to be friends, or good customers. Always have your customers, regardless of who they are, sign an agreement to pay.
The agreement should spell out payment terms - due dates, late payment fees, and non-payment penalties.
Maintain Good Records
Now that you have the agreement in writing, keep it and all applicable paperwork, in a rotating date file that you check daily.
For instance, if the payment is due within 30 days and you performed the service on the first of the month, then on the 30th of the month, pull the agreement and send a friendly payment reminder to the customer.
Follow Through On Collection Efforts
Sometimes, just knowing that there are consequences for non-payment may be just the inspiration a customer needs to pay.
Running a small business is fraught with risks. By following the tips above, non-paying customers won't be one of them.