Engineer Your Finances

A Systematic Approach To Money

  • About Us
    • Disclosure
    • Privacy Policy
  • Contact Us
  • Toolkit
  • Security
    • Credit & Debt
    • Banking & Saving
    • Psychology
    • Other
    • Optimization
    • Education
  • Self Discipline
  • Improve Returns

The Next Step for Non-Paying Customers: How to Prevent Cashflow Issues from Worsening

eyfAlthough late payments are sometimes unavoidable, you try to deal with it as best you can. You send out letters or emails, or try to contact the customer to know exactly what is going on. You even extend payment schedules and make leeway for customers who are having financial difficulties. But it cannot be denied that late payments are sometimes the consequence of a bigger issue that results in absolute non-payment.

If you have done all you can and have not received payment from a customer, what else can you do? Following is a guide to dealing with non-payment to prevent cashflow issues on your end as well. 

Before you take more stringent measures

First, before you decide to take further action, you must ascertain whether you have sent out the proper invoice. Does the invoice have the right information, such as the customer’s exact business name? Also, you have to find out whether the customer has in fact received the invoice. This is where talking to the customer becomes of prime importance. Once you have contacted them, ask them if they have any questions about the invoice. If you have been able to contact them and they promise to pay you at a later date, then you may not need to take action yet.

Send a letter to your customer

The next step when you have failed to reach your customer is to send them a letter informing them that you will be availing of your right to charge them for interest. Let them know that this interest will be 8 percent over the base rate of the Bank of England. In the letter, also state that you will be asking them for compensation for the cost of debt recovery as confirmed under the legislation for Late Payment. It would also be good to let them know that you will be considering further legal action if they still do not pay. This letter is a good way to prompt your customer to make the payment, or at least contact you.

Do not let the debt grow bigger 

Sometimes, we end up still supplying a customer even though they haven’t made any payment, simply because we do not want to lose their business. But the best thing to do for non-payment is to stop sending any more supplies to the customer until their debt is paid. If your customer values your product or service, this may get them to pay. If not, then you know that you are better off without this customer.

Check the state of the customer’s business

If you have done all of the above and have still not received payment, it would be a good time to weigh your options. Check the status of your customer’s business – is it in financial difficulty or does it look like the business will close down? If this is the case, any further steps or legal action may not be worth it. Weigh the time and effort you will be spending – as well as the cost – of further legal action against the size of the customer’s debt.

Dealing with non-paying customers is a reality for many businesses. But if you do not want these non-payments to affect your own business cashflow, you can make sure to always have available cash by taking advantage of cashflow solutions such as those provided by Ultimatefinance.co.uk, where you can draw funds based on your unpaid invoices through factoring or invoice discounting.

Image courtesy of Serge Bertasius Photography/ FreeDigitalPhotos.net

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

FOLLOW US


Our Favorite Posts

  • Is It Better to Have One Big Loan or Multiple Small Loans? by Jenny Smedra
  • Do You Have to Report Cash App Payments to the IRS? by Jenny Smedra
  • How Much Interest Does 1 Million Dollars Earn Per Year? by Trey LaRocca
  • How To Look Up Your Receipt for Walmart In-Store Purchases by Jenny Smedra
  • The 2022 Year-End Financial Checklist by Jenny Smedra
  • How Inflation Affects the Car Industry and Finance by Trey Larocca
  • Important Tax Changes in 2023 Everyone Should Know by Jenny Smedra
  • Want To Erase Bad Credit Instantly? 6 Hacks That Work Fast by Trey LaRocca

Categories

  • Banking & Saving
  • Blogging
  • Book Reviews
  • Career
  • Credit & Debt
  • Education
  • Finance Tips
  • Financial Security
  • Holidays
  • Home Improvement
  • Insurance
  • Investing
  • Investing & Retiring
  • Lifestyle
  • Mortgages
  • Optimization
  • Other
  • Personal Finance
  • Planning
  • Psychology
  • Real Estate
  • Retirement
  • Saving
  • Shopping
  • small business
  • stuff
  • Taxes
  • Taxes
  • Unemployment

Copyright © 2023 · Runway Pro on Genesis Framework