How to Handle Overdue Payments as a Business Owner

As business owners, one of the most challenging things to deal with is money. For a lot of people, collecting payments and asking people to pay us can seem awkward, especially if a payment is late. But there are strategies that we can use in order to mitigate this, making it super easy for us to not feel as awkward when the situation is unfolding.

Be Clear About Payment Terms

It is important for you as the business owner to properly communicate the payment terms that you wish the client to have. Establishing clear and transparent terms from the onset of your project can help with your success rate of actually receiving payments on time. This includes communicating them in multiple different areas such as on your discovery call, in your contract, in your proposal, in your email communications, etc.

The more clear and upfront you can be about your payment terms upfront, the better your success rate will be on actually having people follow those terms.

Use Autopay if Possible

If you have a client paying in multiple different payments, autopay can be a great option to help clients not have to worry about making a payment. Many overdue payments happen simply because a client has simply forgotten that they need to make a payment, or might have received a reminder that a payment is due, but didn’t make the payment right away and forgot.

Auto pay can be a great way to take the stress off of both you and your client and make those payments automatically go through with no delay.

Make Use of Automation

Using Dubsado, we can create payment reminders to send automatically, without any extra work on our part. Asking for overdue payments can feel awkward, but if you take the time to craft the email now, before you are waiting on a payment, you can write a clear-headed email that can be sent automatically to your clients later. Remember that professionalism is necessary here, and to be courteous but firm in your email.

Automation takes the stress off of you having to write something in the heat of the moment when emotions and anxiety can be high. Oftentimes, people just need one simple reminder and they pay their invoice.

Implement Late Fees

If you are finding that your clients are routinely dragging out their payments, even with signed contracts, consider adding a late fee to your payment plans. Be sure that this is clearly outlined and explained in both your contract and in the payment reminder emails sent before the late fee is to take place. Late fees tend to inspire action as the client does not want to have to pay more than they already agreed to for the service.

Be Clear When It’s Time To Get Others Involved

Know the timeline in your head of when it’s been too long and you need to get a collection agency involved in the process of collecting payments. Sometimes extenuating circumstances happen and you might extend payments at your discretion. This is your business, and you are the one making the decisions as to when and how payment plans might be altered, or when it’s time to bring in a 3rd party to assist you.

In Conclusion

Collecting overdue payments can be scary, especially if you are new to the business world. But know that you are not alone and every business owner will have to deal with this sometime in their career. The important thing is to remain professional and be firm in enforcing deadlines when you need to.