Small Business Tips

Late Payments: Simple Prevention and Handling Measures for Small Businesses

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late payment

Nearly 40% of invoices are paid late. Although late payments on goods provided are almost guaranteed to happen, this can wreak havoc on small businesses already struggling through the COVID-19 pandemic. Thankfully, there are a few ways you can help prevent late payments from happening. When they do occur, you can take some steps — including those presented below — to manage the situation without damaging your relationship with your customers.  

Communicate Effectively  

Effective communication with your customers is essential to stay on top of payments and handle them when they do occur. Most importantly, you want to ensure communication takes place without error. 

For example, double-check that customers understand verbal communications by summarizing the conversation at the end. Always ask the customer if they understand and whether they have any additional questions.

Pay Attention to the Contract Details 

Writing a clear contract is one of the best ways to prevent late payments. Pay attention to details when writing customer contracts to avoid confusion.

A few essential details to include in your contracts are:

  • Important dates: Contract creation and expiration dates, dates contract was signed, and (if applicable) dates of goods provided, alongside payment due dates.
  • Involved party’s information: The name and contact information for both you and the customer.
  • Payment terms: When and how payments are to be made.
  • Late payment terms: What happens when payments are late.
  • Contract termination terms: When, why, and how the contract can be terminated before its expiration date.

Make the Invoicing Process as Easy as Possible 

Invoicing doesn’t have to be complicated. You can use financial API bank account balance software, such as Plaid Balance, to help make the process smoother. Plaid Balance allows you to verify (in real-time) whether customers have the money to pay for your services or products. You get peace of mind knowing you can receive on-time payments. Your customers get peace of mind knowing they can avoid hefty fees because the funds are available. It’s a win-win situation. 

Create a Late Payment Plan (and Stick to It) 

Establish a late payment plan, stick to it, and make it transparent for customers. Generally, fees are added to balances once they remain unpaid after their due dates. How much those fees are and when they’re imposed are your choice. 

If payments are very late, you may need to send the account to a collection agency. When you choose to do this is up to you, but some experts recommend waiting at least 90 days. Try communicating with a customer before sending the account to collections. Let them know it’s coming up, and ask them to reach out to you, so you don’t have to take this step. 

You Can Prevent and Handle Late Payments

Late payments are an unfortunate reality that can significantly impact the financial well-being of small businesses already struggling after the pandemic. Thankfully, the information above can help you prevent late payments from happening and handle them when they do occur. 

Keetria is an entrepreneur, wellness advocate, and brand strategy coach for creatives & entrepreneurs with 16 years of public relations expertise working with some of the world’s leading brands, startups, media personalities, and entertainers. If you would like to work together, don’t hesitate to reach out!

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The 3 Motivational Resources for Small Businesses

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3 Motivational Resources for Small Businesses

Staying motivated is one of the keys to staying in business. When you don’t give yourself enough of a push to get things done, things start to fall off track. Think about an unmotivated version of yourself to the highest degree – not answering phone calls, deciding to stay in bed all day. How productive is that?

Normally motivation is something that starts to slump off slowly, though. It starts with small shrugs and ignoring your to-do list for one day, but it soon snowballs into something else: full blown apathy.

This is only compounded in a setting where others are also at risk for losing motivation. You can try your best to keep yourself and your employees motivated, but a big problem is that what drives all of us is totally different. Someone in their 40s might find their children and spouse to be what drives them to perform every day, but someone younger may find motivation in the form of trying to pay off those student loans.

What doesn’t change for everyone, though, is general motivation – the kind of motivation that tells them to keep doing what they’re doing for success. This three resource areas can be what kick you and your employees into motivation overdrive.

Trade Shows and Conventions

Sometimes what keeps someone from being motivated is they feel like their job or business is stuck in a rut. It isn’t trying new things, so why should they? As a small business owner, you have the power to show them the possibilities are endless, but it can be hard to do this through talks and conversations alone.

What’s the solution? Invest in taking your team to a convention or a trade show. In this environment, you can both take notes as a SMB owner about future possibilities while simultaneously showing off to your team that change is possible, you’ll just have to figure out how to implement it.

Motivational Speakers

This may sound cheesy, but motivational speakers CAN work for your team. You need to get rid of the stereotypical motivational speaker image from your mind – the energetic man on stage, screaming faux-zen self-help adages at an audience.

In reality, motivational speakers are often very business savvy. Their main audience is one that is in the business industry, thus they put a business spin on their advice. Topics like success, communication, motivation and confidence are common topics that these speakers cover, and their sermons often include tips and tricks for a more fulfilling business life.

Literature

There are a ton of motivational books out there that are geared towards business, but sometimes a problem arises: much like you may not have wanted to read the required reading in high school English class, your employees may feel no incentive to read any books you recommend.

The solution is to invest in a class set, of sorts. Buy enough books for your employees and schedule in meetings or time during existing team meetings to talk about a chapter or concept from the book. This puts more emphasis on the necessity to read the book while also making it a discussion about the motivational, helpful aspects of the book.

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