Having a steady cash flow is a must for any startup as it keeps your business running and in long run. It is not only going to contribute to maintain healthy base for client/customer management, but will also help the business to pass the startup phase smoothly.
Well, when it comes to the cash flow, there are always some known and some unknown challenges which may cause trouble at some stage, i.e. whether it’s a startup or an established small business, there are always some clients who forget to pay on time.
Well, being a startup you will certainly be not in situation to have such cases, but you must expect some. You do need to acquire more users faster, and in fact having a strong customer base is most important for you, and you cannot be rude to delayed payments. However, the best way is to have a contingency plan to deal with any such situation in a gentle way.
This article will discuss the most important steps a startup should follow to deal late payments.
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1- Make Sure That “The not received invoice” Is Received:
Many debtors use this excuse in order to stall things a little bit. In case they say that they did not receive the invoice, the best thing to do is to send them through courier with proper receipt.
2- Make Use of Phone:
You should also call the department that handles these procedures in order to see if the invoice was really sent or not. This will put a little bit of positive pressure on the client so that he knows he has to pay the dues until a certain date.
3- Using the Electronic Medium for Invoicing:
Send your invoices electronically because in this way you do not waste any time. If you manage electronic invoices, make sure to resend an invoice after two or three days to remind the client that they have to pay till a certain date.
4- Adding Late Payment Fees:
Adding a late payment penalty work like a charm, but make sure to update your terms before applying any late payments!
5- Upgrading Payment Methods:
One of the great excuses is that the client has sent a cheque, but it never got to the destination. A simple solution is to eliminate this method of payment altogether. If you still want to practice it, you should ask them about further details so that you can contact your financial institution.
Depending upon your business model you may bring further upgrades in the payment processing methods; the above guidelines are devised keeping a generic late payments issue in mind!