Collect Late Payments Without Compromising Customer Loyalty

This article was written by: Derek Goodman of Inbizability

The main goal of most businesses is to attract new customers to earn a profit. As a business owner, you have to constantly brainstorm new ideas to bring clients to your company and retain them. While you can market, network, and solicit referrals, keep in mind that your business's popularity also depends on how you treat your existing clients, including how you handle late payments. If you’ve been struggling with how to manage late payments, here’s some advice.

When you’re ready to maximize your digital marketing efforts to boost profits, AMA Consulting Services can provide a 3-step digital marketing methodology fine-tuned to your business’s needs.

Creating a Successful System

You should have a system in place to handle late payments. Handling past due invoices is a regular part of doing business. Make sure the customer is well aware of your policy ahead of time. If you have to pursue payment through collections, does the client have to pay the fee? Mention any late fees and any other penalties for late payment when initially doing business.

How you contact the client should also be within your plan. For example, you may need to call rather than email or be careful what you say to a person about late payments.

You can also use payment collection software to track and accept payments from diverse payment methods. When you use software to your advantage, it is easier to keep track and receive your money.

Practicing Empathy and Flexibility

Without your customers, you don't have a business. If you do not properly value your clients, you may not spend enough time cultivating customer loyalty. Earning customer loyalty benefits you, your management, and your company. While numbers matter, you cannot treat each customer as a number.

Generally, when a person has a late payment, he or she does not feel good about it. It makes no sense to shame a person into payment or to refuse to be understanding. Do not be emotionless. When you show empathy and emotion, a client is more likely to remain loyal and work with you. Consider all of the reasons a person may have for missing a payment. For example, the customer may have missed the invoice, been unsure how to pay through your website, or been going through financial hardship.

It does not matter if you have the best product or service; if you do not have positive customer service, you will lose clients. Satisfied customers are more likely to return to a business where they feel well-treated and respected as people. Happy customers tend to spend more and maintain a relationship with companies.

Incentivizing Customers in the Future

If you want clients to pay on time, consider offering incentives. When a customer pays late, it can affect your bills and the cash flow of your business. On the one hand, paying on time can save a person late fees, but if you offer a discount for early payment, a client is even more likely to want to pay early.

Make it easy for your clients to pay. Nowadays, businesses need to have a variety of payment methods. Different generations of people may use various payment methods for doing business. When a person has multiple options, he or she is less likely to have a late payment. When there is only one way to pay, it severely limits the customer.

When you accept payment through your website or an app, it’ll be more convenient for customers to pay you, but you’ll need to ensure that you protect their personal information and data. Fortunately, Plaid’s bank account authentication software allows you to securely and instantly verify your customers’ bank information.

While you need to receive payments for goods and services on time, you have to keep in mind that most people struggle with finances at some point or another. There are many reasons a customer may be unable to make a payment. If you practice empathy and incentivize paying on time, you may find that customers take the effort to pay for what you offer and remain by your side regardless.

Image by Pexels