The most common question that arises in every businessman’s mind is how to deal with late invoice payments. So, in this article we will discuss 4 ways to deal with the late invoice payments:
Step 1: Control the payment failures
Controlling payment failures is the only way through which you can maintain an efficient cash flow. Cash flow can be maintained by appropriately maintaining the invoices. You can use autoTax to maintain your day to day invoice process. In case if the number of invoices are less you can also use our free GST Invoice generator https://www.mastersindia.co/gst-invoice-generator/
The other way is to determine the payment process of your clients that will help you to remind them if they have exceeded their last date of payment. This takes us to the next step that is follow-up.
Step 2: Follow Up
At the time of following up, you need to understand that there can be different reasons for holding up the payments. Some of the common problems are waiting to get paid, going through accounting transitions or experiencing administrative delays. So, while taking a follow up for the payment due, you need to ask it calmly. You can also provide the following solution:
- Extend the term of payment
- Payment in installment
- The option to hold off on the next month’s budget
- A link to an online payments page
- Early payment discount
- Penalty for late Payment
Just remember the key to follow up is providing solutions to the clients. And to do this you need to contact primarily with the accounts payable team of your client as they have the authority to process the payment due.
Step 3: Wait
After taking follow up from the client’s AP team you need to wait for a while as processing the payment due takes some time. There are different ways to make payment, some of them are:
- Online payment
- Payment through credit card
You just need to be patient and you need to understand that your customers have businesses to run, too.
Step 4: Draw Credit/Debit Note
In case if a business do not make payment with in stipulated period then you can draw CDN (Credit/Debit Note) of such amount and the recipient is required to reverse the credit taken by him/her.
The Bottom Line
Trade is the base of any country’s economy and any payment missed is more than a breach of contract. Any default in payment not only disturbs the day to day activities of a business but also adversely impacts the economy.
So it is recommended that communication between the parties involved must be transparent as it will eliminate the chances of disputes. Moreover, maintain a healthy relationship with your clients so that you don’t keep chasing them to receive the payment.