How to avoid chasing late payments…
Having to chase late payments is a common frustration for small business owners, which along with consuming time can also have serious consequences on cash-flow – in fact almost 1 in 5 small businesses are currently having to use overdraft facilities each month.
Here’s some steps to help avoid these issues:
1. Research your potential customers – it’s easy to use online tools to look at the payment history of companies and whether they have a habit of paying late
2. Agree payment terms that are acceptable to your business – payment terms that may be fine for larger firms (such as 120 days) may be inappropriate for your cash flow
3. Build relationships with your customers – keeping regular contact and taking the time to get to know each other’s businesses means you’ll be on better terms and contracts are more likely to be adhered to
4. Have a contingency plan – late payment issues are likely unavoidable at some point, so having financial options in place makes a lot of sense