How Much Money Do Your Customers Owe You?

How Much Money Do Your Customers Owe You?

Dealing with someone who won’t pay you has got to be one of the worst feelings ever.

The money they owe you rightfully belongs to you, and yet you still have to be tactful about asking for it.  And, even then, after all necessary niceties (and more threatening remarks, I’m sure), 1 in 4 business owners still have trouble collecting payments from customers.  Adding insult to injury, a YouGov survey showed that in2013, 11% of business owners nearly had to close their doors because of issues with late or missing payments.  Not only is the issue of late payments pervasive – it’s also potentially deadly (for businesses).

Something You Probably Knew Already

Of course I don’t need to sit here and tell you collecting money that’s yours is important.  A dollar you earn now is a dollar you can use to fulfill all kinds of needs, from stashing it in an interest-bearing account to reinvesting it in your business – and, none of that’s possible if you aren’t being paid on time.  It follows, too, that if enough of your clients take too long to pay you for the goods or services you sold them, you may have to close your business; this not only makes logical sense, but the aforementioned study proves it as well.

And, Something You Probably Didn’t Realize

One thing you probably hadn’t considered was that when you have accountants pounding the phones just to squeeze a few dollars out of your deadbeat customers, it not only stresses them out for a marginal (or nonexistent) return, but it takes them away from the things they really need to be doing, like compiling reports or collecting payments from people who are calling you.  So, the negative effect of dealing with people who won’t pay is actually twofold: You lose productivity when you call an emergency “fundraising” session, and, there’s no guarantee you’ll actually recover the money you’re owed.

Given All That, What Do You Do?

It can be extremely stressful dealing with this kind of situation.  This article on avoiding late payments from clients details five different ways to either convince your worst customers to pay up or prevent the very situations that result in delinquent payments, like unclear business terms or lack of an electronic, integrated credit card processing system.