Late Payment Research Paper

Source 3: How to prevent late payment from clients (2013)

Katy Cowan says that late payment is unluckily a sad fact of life for many small businesses and she gives some tips to help to avoid the late payment from clients. First, present clear payment terms and it means an employer can determine the period for the client the payment is made, as well as determine the benefit in the event of a delay in payment. As well as the client must be informed on payment terms in writing and explain to him that there are benefits when the delay in payment. Second, ask for deposits upfront and staged payments. There must be a policy so that the customer pays 50%, one-time before the start of the project. And motivator must be clarified that the remaining

And they give some ideas to avoid the late payment before they become a real problem. First, make your payment terms clear from the start. It means when you want to work and make relationship with clients first thing you should make a contracts invoices with the payment terms. Second, Have an accounts contact. It means you should have the email or number for a specific person who can help you to follow up any overdue invoices. Third, have a payment tracking system. It means you should keep on top of your invoices and know the status for all your invoices by using some accounting system such as FreeAgent to help you to tracking you invoice. Forth, charge interest on late payments. Fifth, consider invoice financing by use some of financing company to manage your cash flow and your late payment. Sixth, provide incentives for prompt payment by gives a discount for quick or early payment. Seventh, Electronic invoicing and payment. It means to use invoices electronically by email and make the customers to pay in the online system so that you can manage you cash flow easily. Finally, debt recovery by using a last method for the difficult clients which is use a professional person such as lawyers to get your

And that puts a major problem in their cash flow so she gives six tricks to put an end to late paying customers. First trick is to be Careful, it means to know as much about a customer as you can before make a contract with them for example pull their business credit report to see if their perfect in the past or not. Second trick is to be clear by write the terms clear and make sure your customer knows your policy and your late payment consequences. Third trick is to be Polite by be friendly and warm in your invoices and being polite can increase your chances of getting paid by 5%. Forth trick is to be convenient by make a quick payments methods for your customers such as online payments and checks in email. Fifth trick is to be Flexible with customers if they have a difficult financial and make a new way like installment so that will help them and will allow you to receiving your cash. Finally, to be consistent by send a friendly reminder email or letter before due date and that will increase your chances to receive your