Late payments are an inevitable part of doing business. Customers miss due dates for a range of reasons, from forgetfulness to financial hardship. The way you handle overdue accounts affects more than your bottom line — it also impacts your customer relationships. With the right approach and some tips presented below by The Property Management Coach, you can get paid and build loyalty at the same time.
Send an Immediate Reminder
In many cases, payments are late because the client simply forgot to pay. Spur them into action by sending a reminder immediately after the deadline passes. Use email if possible — it’s fast and free — and follow up with a mailed notice.
When you send email reminders, it’s helpful to attach a PDF invoice that details the payment dates, potential late fees, and the amount due. Check the file size first; extremely large files can be difficult to send or download. A PDF compressor can help you shrink the file to an email-friendly size, all while maintaining the text, layout, and image resolution.
Offer Additional Ways To Pay
Sometimes, late payments are a matter of convenience. If you only accept payments by mail, for example, clients might be held up by a lack of checks or stamps. Encourage your clients to bring their accounts current by offering multiple payment options, such as:
- Pay-by-phone. This is ideal for older customers and people who aren’t comfortable giving credit card information.
- Online card payments. Accept payments through your website.
- Payment processors. Set up accounts with multiple services, such as PayPal, Venmo, and Cash App. That way, it’s easier for customers to sign in to an existing account and pay quickly.
Does your company have an app? Consider adding a payment feature; that way, clients can add their bank account information once and use it for future payments. To build confidence, you’ll need to protect private financial information, so use a bank account authentication program like Plaid to create a secure link between your ACH system and customers’ accounts. With a built-in system that’s safe and easy to use, you can reduce late payments and encourage repeat business.
Have a Conversation
When a customer is significantly behind on payments, there’s a good chance they’re struggling financially. It’s helpful to have a conversation to find out what’s happening and work out a new payment agreement. The person is probably undergoing a great deal of stress — they may be dealing with angry collection calls. If you’re kind, professional, and accommodating, you’ll increase the chances of getting paid; you may also gain a loyal lifetime customer.
Ways To Prevent Future Late Payments
To prevent late payments, try these methods:
- Send email reminders. Use your invoicing software to send out automated alerts before the due date.
- Offer a discount for early or automatic payments. Small financial incentives can go a long way.
- Ask for a deposit. Charge a portion of the fee up-front.
- Write clear contracts. State payment dates and terms clearly. Don’t forget to include the names and signing date and explain what happens if the client doesn’t meet their obligations — including late fees. Also, create a timeline of when you’ll cancel the contract.
Reduce Late Payments
Chasing down late payments can be costly and time-consuming. With a proactive approach and the right technology setup, you can encourage customers to pay on time.
Contributor – Katie Conroy is the creator of AdviceMine.com. She particularly enjoys writing about lifestyle topics and created the website to share advice she has learned through experience, education and research.