Small Business Customer Not Paid – What action to take

Small Business Customer Not Paid – What To Do

Customers that do not pay on time can be a problem for small businesses.

Having a customer that is refusing to pay can hurt a company’s cash flow, and this is even more worrying for smaller organisations.

It is often the case that every payment makes a big difference, and a bad debt occurs the entire company can be put at risk.

Most small businesses do not have an endless supply of money, and the slightest knock could undo a lot of hard work.

Many small business owners suffer through stress, frustration and sleepless nights when a client owes them money.

Knowing that it is completely correct to chase a customer for payment is important.

If you have provided goods or services to a customer who is happy with it, you fully deserve the money that they owe you.

Unfortunately, many people will go to great lengths to avoid paying what they owe.

We asked our debt collection experts what the best way company owners can handle the issue of owed money is.

We will guide you step by step as we explain how to resolve the issue of small business customers not paying.

Preventing Bad Debt – Performing Due Diligence

The best way to prevent a small business customer from not paying is to make sure every precaution is taken before an agreement is made.

Performing due diligence such as a credit check is helpful, as it is good to do research before committing to doing business.

Finding out if they have a physical office address is good, as well as the names of the people you are dealing with.

If the customer later decides not to pay, you will be able to contact them to chase payment.

You will also be able to verify any information you have been provided.

This is a good way of telling if a customer intends to pay.

It is common for people to provide false information to avoid paying later.

You can also set up payment terms to ensure that a customer must agree to.

Terms such as these detail when you require a customer to pay their invoices.

It should also provide information on penalties they must pay if they miss an invoice.

These penalties could include the right to claim interest on unpaid invoices, as well as informing the client that they will be charged interest too.

Small Business Customer Not Paid – Dealing With Late Payments

Late payments can put a strain on your organisation and can cause you to spend a lot of valuable time chasing them.

Many smaller businesses may only have one or two members of staff, and often the business owner must deal with late payers themselves.

This can be frustrating, but despite this, you must always be polite and professional with your customers.

This is important to help maintain a good relationship with your customers, as reacting angrily could jeopardise future opportunities.

If a customer is delaying payment, you should contact them as soon as possible to discuss this.

Sending a payment reminder through an email, a letter or even a short phone call can help to prompt the customer to pay.

If an invoice is overdue, you should send your customer a reminder within the first 14 days.

Follow-up reminders should be sent between 14 and 30 days after an invoice has not been paid.

Small Business Customer Not Paid – Financial Difficulties

It is entirely possible that your customer is in financial distress and may simply be unable to pay.

Whilst this does not change the fact that you are owed money, it is often better to accommodate a customer in this situation.

Rather than demanding that the money that you are owed be paid in one lump sum, it is reasonable to set up a payment plan instead.

This will ensure that the money that your customer owes you is paid over time.

It will also do this in a way that does not put them into even more financial stress.

Although it may take longer for your money to be paid, you will end the matter amicably.

For small businesses dealing with companies, this is invaluable, as they will recognise that you are good to deal with.

This will reward your business with more income from future opportunities with similar businesses.

Small Business Customer Not Paid – Overdue Invoices

If you have sent reminders and have payment terms that the customer has agreed to, you should send a final notice letter.

This letter could also be known as a letter before action and is used by companies of all sizes.

It should professionally and firmly state your intention to escalate the matter should an invoice payment still be withheld.

Many small business owners in England and Wales do not have the resources to chase payment.

Nor should they, as they are rightfully owed money for the goods and services that they have provided.

In this letter, many companies state that they intend to take legal action and seek to settle the matter in a small claims court.

Another option is to say that a debt collection agency will be instructed to recover the debt.

This letter should be sent if all other payment reminders have been ignored, and the invoice has been overdue for more than 30 days.

It is critical to remain professional, as your customer may have simply missed all other reminders.

Small Business Customer Not Paid – Debt Recovery

If the worst has happened and your customer is ignoring your requests and completely refusing to pay, it is time to contact the professionals.

There are many options for this, such as seeking legal advice, but the most beneficial and cost effective choice is to contact a debt collection agency.

Frontline Collections is the UK’s leading private and small business debt collection agency.

Since 2005, we have helped thousands of businesses recover money owed to them by non-paying customers.

Our service is effective, professional and is provided on a low-cost basis.

If you are a small business owner who is having difficulties with customers that are not paying, speak to us today.

Our debt collection experts will provide a free pre-action assessment of your debt to help you understand your options.