No Payment Within 30 Days? How To Prevent This
How to Get Payment Within 30 Days – Invoice Payment Terms
It is an unfortunate fact that not every customer will decide to pay on time (or at all!).
When this happens, it can be difficult for a business to operate as normal, especially if this a common and persistent issue.
There will always be customers who choose to try and ‘play the system’, to get away with payments.
There are ways in which you can minimise the effect this has on your business. You can also reduce the impact this has on your day-to-day operations running and cash flow.
We help private individuals, small businesses and those who are self-employed recover what is owed to them every day.
Our team of debt collection experts have provided their main pieces of advice for preventing late invoice payments.
The Importance of Payment Terms and Invoice Due Dates
In business, it is normal to have ‘payment terms’ discussed before any agreement is made.
Payment terms are like ‘Terms and Conditions’ in the sense that they need to provide an overview of all matters relating to paying.
It is appropriate to present payment terms at the beginning of a new agreement. In a business meeting, it would usually be discussed before being signed by the customer.
For a private matter, maybe when lending money to a friend, this may seem like overkill. However, it is completely acceptable (and advised) to prepare some kind of payment terms.
This will help to recover any owed money if that person does not pay you later on.
Payment terms set out some kind of time frame for the customer to pay for goods or services.
For example, if a cleaning business provides their services to an office, their invoice may have a due date of 30 days from then.
This will also have been in a payment terms document sent to the customer before any service was agreed upon.
Typically, this time frame is 30-days, although in some situations it can be as much as 60-days.
In this example, we will say that 30-days have passed and the customer has not paid. This means that the value on the invoice is now overdue.
As the customer has agreed to pay within 30-days, this matter can be escalated. In some business situations, interest can be charged on an overdue invoice.
This is a good way for a business to minimise late payments. The prospect of having to pay interest is usually enough of an incentive for most customers to pay on time.
If you are self-employed, a freelancer, a small business or acting independently, you should dedicate time to prepare proper payment terms before carrying out any work.
It is even more important to get this signed by your customer. You should also give a copy to them, and keep one for yourself.
If they don’t want to sign this agreement, or if they are extremely resistant to this idea, this may be a good thing for you.
Knowing that they are hesitant to sign this document suggests that they probably won’t be paying you for your services.
If this is the case, you have already minimised one case of late payment.
Setting up payment terms can help prevent overdue invoices
Payment Terms 30 Days – What Happens if a Customer Does Not Pay on Time?
Despite the best preparations and precautions, some customers will unfortunately still choose not to pay you.
As frustrating as this is, it is important to keep a calm and professional standpoint. After all, there may be a reasonable explanation for the lack of payment.
The very first thing you should do if a customer has exceeded the 30-day payment term is to attempt to contact them.
In some cases, the customer may simply be unable to afford the total amount of the invoice. If this happens, you may suggest a part payment.
Doing this will make things easier for the customer, ensure you get your fees and also end the matter amicably.
If the customer is not in financial difficulty and is being awkward, try to remain calm and professional.
If you have prepared payment terms, then the customer should be as aware of their obligations as much as you are.
Popular excuses for non-payment are phrases like “our computers are down at the moment”, “the accounts team are not in the office today” or “we have not received the invoice yet”.
Knowing when to escalate the matter to the next step is not always simple. As frustrating as the situation is, the customer may be telling the truth.
Then again, they may be trying to delay as much as possible.
It is sometimes difficult to know exactly what is happening. In truth, this can often come down to experience.
The fact remains that you have provided services and have not yet been paid.
If you are charging interest, this may prompt the customer to pay.
Unfortunately, this does not always guarantee payment, as some customers will ignore all communications and consequences.
In the case of small businesses or those who are self-employed, it is not unheard of for bigger companies to withhold payments.
We have all heard stories like this in the news, and often the person who is owed money is made to wait for months before getting any payment.
This is sometimes because the person owed money is hesitant or does not have the time or resources to enter the process of debt recovery.
Some are afraid of compromising a potentially lucrative business relationship by “rocking the boat”.
It is important to remember that no business has ever lost a client simply because they were asked to pay.
Escalating the matter in a professional way is the best solution.
If this must happen, it is important to know the best solution.
I’ve Had No Payment Within 30-Days and the Customer is Ignoring Me – What Should I do?
If you have done all the preceding steps have and the customer is still not paying, it is time to instruct a professional debt collection agency.
An agency will be able to take the appropriate steps to recover the money that you are owed.
This will be done in a professional manner, with the business relationship between you and the debtor remaining unharmed.
This is good for those who are self-employed or who own a business, as future opportunities with that customer will remain viable.
Frontline Collections recover thousands of pounds worth of unpaid fees every week, helping clients across the UK.
If your customer has not paid you within 30-days, or the terms of your agreement, speak to one of our friendly debt collection experts today.