Don’t Let Late Payments Interrupt Your Payroll

MasterPay USA knows that your finances are defined by more than the checks you write each week. With this in mind, today’s blog touches on the important topic of managing your relationships with your customers, even when they don’t pay on time. In doing so, you’ll not only keep your customers happy, but you’ll ensure that you always have the money on hand to handle payroll.

There are many reasons that your customers might not be able to pay on time. If you’re dealing with other companies, they may be dealing with late payments of their own. When it’s the general public, reasons are diverse, ranging from simply forgetting they owed you money to feeling entitled to pay late (or not at all) if they perceive even the slightest infraction of your products or services.

But, you have performed your duties, and they are legally obligated to pay you for your time and troubles.

Getting paid on time is, ostensibly, your number one priority when it’s time to collect money. This might not always be easy, especially for large orders, but there are ways to encourage payment on demand or at the time of service. One example is to incorporate Plaid Balance, which features a balance API option, into your invoicing software. This allows you and your customers to confirm they have the money available to pay their bills. In doing so, everyone will feel less stress and neither will be hit with overdraft fees.

Another smart method to get a check at the point of service is to offer a small discount or incentive. While it might sound counterproductive to give a discount simply for paying a bill that they owe anyway, keep in mind that paying a collection agency can get expensive, whether your agency charges upfront or by the collection. A small one or 2% discount may be just the encouragement your clients need to pay now and save everyone the trouble of collecting an overdue bill later.

When things do go past the 30-day mark, it’s time to reach out. But, the way that you communicate with your customers now can have a significant impact on their willingness to pay you today and patronize you in the future.

This starts by clearly outlining payment terms. If you’re going to charge late fees, be upfront about this from the beginning. A late fee is an amount of money, either a flat rate or a percentage of their total invoice, charged as a penalty for paying after the due dates. Many people will expect this, but make it visible on your invoices from the very beginning.

According to a 2019 study cited on PR Newswire, customers prefer text over a phone call in many cases. There are benefits to texting for you as well, primarily that you will have a record of the conversation should your collection efforts need to be elevated or, in the unfortunate event that goes on too long, winds up in litigation. Be professional but firm in your correspondence.

If text messaging doesn’t work, an email might. Within your email, you can offer many different ways to pay, which Lumen Advisory explains is one way to encourage payments. Remember, not all customers want to use cash or checks, and many prefer to use an online payment processing service, such as PayPal.

Late payments are not fun for anyone. It reduces your available money, and overdue bills will only stress your customers out. Thankfully, with tactfulness, patience, and perseverance, you can avoid any late payments and make life easier for everyone.