Do you struggle with late payments?
Do you lack clarity on what credit you offer your clients?

The problem may not be what you think it is…

It’s a risk any business owner faces; that of a late payment. Not only can this be detrimental to your own cash flow but can also affect the services that you are able to provide for other clients.

If only there was a way of spotting the signs of an imminent late payer.

The top seven signs a client may not be able to pay you

Just because a client is a late payer, does not mean they are bad people, but they are not always the easiest clients to deal with. Here are seven signs that your client may be a late payer.

  • Confused fundamentals – When initially signing the client up, if they refuse to give any of the basic information, don’t want to sign a contract or are using a personal email or PO box address it could be a sign they are not legitimate or are not in a position to pay.
  • Poor credit history – When signing up a new client it is always advisable to get a credit check carried out on them and their business. If they have been a poor payer in the past, you are unlikely to get paid on time either.
  • Forgetful clients – clients who always seem to have misplaced your payment details, especially around the time the invoice is due may be stalling for time. Always ensure that payment details are clearly displayed on the invoice.
  • Client is acting differently – Through developing a strong client relationship you will find it easier to notice if they start acting differently towards you. If they suddenly start being indecisive, or unreliable with contacting you it could be a sign there’s a problem.
  • Client goes AWOL – If a client, who has been invoiced, suddenly becomes very elusive; doesn’t reply to emails, doesn’t return voice mail and doesn’t answer the phone, they could be going through cash flow problems and are avoiding awkward conversations.
  • Company upheaval – High turnover of staff, redundancy, or changes in a business could send out alarm bells that there is trouble within the business which could affect their cash flow, and then ultimately yours.
  • Client requests extension – A client could request an extension on their payment date due to cash flow problems. This is a flag that they will potentially be a late payer. Ensure in this situation you give them a specific amended date and not the vague ‘couple of weeks.’

What can you do about late payers?

Late payers are sadly a fact of life when running a business but even though it is inevitable that at some point you will be hit my one it doesn’t mean there is nothing you can do about it.

  • Know, like, trust – It seems a bit of a cliché but the more you get to know your clients, the more you will like each other (hopefully) and the more you can trust each other. A happy client may not wish to jeopardise a good working relationship by not paying on time. 
  • Credit checks – Before signing up a new client, you can always do a credit and company check to see whether they are legitimate as well as what terms you feel you need to put in place to protect yourself.
  • Clear payment terms – By having very clear payment and invoicing terms which the client agrees to makes expectations clear on both sides. This should not only include payment up front but also any late fines that will be issued. For more on terms and conditions read our blog The Dangers of not Having terms and Conditions.
  • Maintaining your own systems – If you have clear processes you need to ensure you follow them yourself; delivering on time, invoicing on time and chasing up on time when payment is late. Having all your payment details and terms clearly written on all invoices makes payment easier.
  • Regular communication – regular contact with the client could help solve the problem. For example, if their cash flow or invoice process and your invoice dates don’t tally, it could be a simple case of ensuring your invoices are issued at a different time of the month to ensure they are paid on time.
  • Always stay calm – Chasing late payments can be difficult and you need to find a happy medium between being firm but being pleasant as well. You don’t want to destroy your relationship, but equally the client agreed to the terms, of which you are just following up. For more help with making that call, see our blog Six Top Tips for telephone Chasing of Overdue Payments.

What next?

Credit control and credit management is a difficult task especially when clients don’t pay. Many business owners find it difficult to talk about money and therefore are not firm enough in their chasing. If you would like to discuss methods of credit control or how to produce a watertight set of terms and conditions, please book a call with Confident Cash Flow today to see how we can help you.

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