Can Small Businesses Deal With Late Payments Efficiently?

One of the most worrying and difficult things to deal with when you run a small business is what to do when people don’t pay. For example, if you’re a relatively new freelancer and you’ve just landed a major contract that is taking hundreds of your hours, what do you do when the company you work for decides to not pay or pay less because of whatever reason?

These situations are never fun to deal with, but there are ways to protect yourself and ensure that you never run into these kinds of situations ever again.

Tighten up your payment terms so that you don’t run into issues

First of all, make sure your payment terms have been described properly and that you’ve covered every potential situation. For example, you can request that clients pay half up front, or you can let them know that if they’re not happy with their work, then they’re entitled to a certain number of revisions or replacements. Whatever kind of service or product you offer, it’s important to have clear terms associated with your business so that people don’t try to take advantage of you. Sure, you can make exceptions now and then, but it’s best to stick with your terms so that people know not to mess around with you.

When starting a small business, it’s important to not let people take advantage of you. Many questionable and shady businesses and clients will do everything they can to squeeze every bit of value from your partnership. In some cases, this can end up costing you a lot of money and there’s very little you can do about it outside of just complaining. As such, tighten up your payment terms, cover more potential situations, and reinforce those rules.

What to do with clients that consistently pay late

If you have clients that are consistently late with their payments then you typically have two options; to be polite and notify them of this, or to cut off their contract and stop offering products and services to them. The latter is usually a last resort and it’s often much better to try and communicate with them.

You could offer alternative payment options as well, such as automated payment systems instead of requiring them to manually send payment.

How to deal with people that refuse to pay

And lastly, how should you deal with clients that just don’t want to pay? This is a serious problem that can affect your cash flow and if they’re being unresponsive to emails, then you may want to consider speaking with a commercial collection agency and have them resolve the issue for you. As a small business, it’ll take a lot of time and effort to chase down customers and clients that refuse to pay. As such, you’ll want to offload that responsibility to someone else.

While dealing with late payments can be troublesome, it’s important to establish good practices to help avoid it in the first place and to blacklist certain clients that are giving you too much trouble.