But could we business owners be the worst offenders of all?
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Hands up who enjoys hassling customers about late payments?
Hmm. It’s all gone very quiet.
It’s perhaps fair to assume that dealing with overdue payments is not exactly one of the biggest pleasures of running your own business.
But here’s a controversial suggestion;
Are small business owners amongst the biggest culprits of all when it comes to failing to pay suppliers on time?
In just a moment, I’ll reveal the facts and figures from a recent report which indicates that small business owners are just as likely to be the perpetrators as they are the victims.
I’ll also be taking a look at some quick tips and pointers on how you can increase your chances of actually getting paid on time for your hard work!
But first, I just want to tell you about Wonky Simon, my old entrepreneurial friend who supplies products and services to other businesses.
Last time I bumped into him whilst queuing down in the Sweet Pastry Shop, he was ranting and raving about how overdue payments were crippling his cashflow.
“How hard can it be for people to just pay for something on time like they agreed?” he wailed.
“I’m sick of wasting my time on chasing up money that should already be rightfully mine. And now I’ve been forced to put some of my future plans on hold because I’m still waiting for my own customers to pay up! It’s a ridiculous situation!”
Hmm.
I can see his point. Very clearly, in fact.
Wonky Simon’s payments for his latest custom projects from Martin Print have just gone overdue.
His order included Transparent PVC Business Cards, Brochures, and, ironically enough, Invoice Books!
I was going to bring this up with him, but I could tell he was already having a bad day.
I knew he would get the polite email reminder tomorrow anyway.
But whilst small business owners can be hugely impacted by the hassle of late payments, a recent report from Vistr reveals that we’re also amongst the biggest offenders…
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The cashflow forecast providers analysed the data from over 500,000 payable invoices and dug up the following surprising statistics on small business;
No less than 51% of invoices from suppliers are paid late.
35% of those late payments go overdue by more than 20 days!
And 1 in 10 small businesses admit to paying their invoices late 75% of the time!
On a slightly more reassuring note, 40% of all late payments are usually settled within the following 7 days, which perhaps indicates that a big chunk of these overdue billpayers are simply overlooking the payment rather than purposefully making a decision that they won’t or can’t pay!
But it does seem as if we need to try harder to settle our own bills in a more timely fashion if we’re ever going to get out of this vicious circle.
I’m still waiting for Wonky Simon to pay me for the print and design goodies that my business has provided for him, because he’s still chasing up the overdue payments for the services that he’s provided for other businesses.
It’s a common chain reaction which will spiral further and further out of control until every small business manages to keep a closer eye and a tighter grip on those incoming invoices…
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So, let’s assume that you’re already a deeply conscientious business owner who strives to pay your bills on time every time.
Until the rest of the world gets its act together and follows your shining example, you’re still likely to face the hassle of overdue payments on an all-too-regular basis.
What can you do to increase your own chances of getting paid on time?
Here are five quick tips to help you avoid having to chase up overdue invoices from some of your more ‘forgetful’ clients…
Put Your Clients in the Picture!
An obvious one to kick off with, but it’s surprising how many people don’t pay their bills on time simply because they weren’t acutely aware of the timescale.
It’s not because they ‘forgot’ or they were a bit busy that week.
They were just simply never properly informed in the first place.
Don’t leave it until the last minute to suddenly tell your customers that payment is now due.
Make sure that the invoice terms are politely but explicitly spelled out from the beginning.
Stay on Top of the Game
Keep a very close eye on your customer accounts and invoices.
If anything looks as if it’s about to slide, then try and deal with the issue at the earliest possible opportunity.
There may not be any need to get too heavy at this stage.
Try to understand your customer’s unique situation, and weigh up your obvious need for full payment with the long-term value of your client and the relationship they have built up with your business.
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Don’t Forget to Remind!
Here’s one of the reasons why Wonky Simon was in a particularly troublesome spot;
He’d left it far too late to remind his customers that they were overdue with their payments.
You could say that he’d forgotten to tell them that they had forgotten!
Ideally, you should always have a system in place which allows you to notify your overdue clients as soon as they cross the mutually agreed deadline.
More often than not, a gentle nudge in the form of a polite email or telephone call is all that’s required to jog your customer’s memory and spur them into making a speedy payment.
Leaving things to hang in the air for far too long is only going to drag out your own cashflow problems.
Incentive for Early Payments
We all instinctively like to make a little saving here and there, no matter how small.
By offering a small discount as a reward for early payments, you could potentially end up with your clients battering down your office doors to give you their money as quickly as possible!
Well, perhaps not literally…
But it certainly presents a clear advantage to both parties.
Your clients get the satisfaction of making a little saving from the same early payment which has given you peace of mind.
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Offer a Bigger Choice of Payment Options
Finally it’s perfectly reasonable to assume that some of your customers might just find it easier to pay you on time if they can choose the perfect method or payment plan which suits their immediate needs.
Don’t restrict your payment options to the methods which you find to be the most convenient.
You’d be making life potentially difficult for your clients and you’ll end up losing custom to rival businesses with a healthier choice of payment options and plans!
As an example, Martin Print provides an EasyPay plan which splits up the total cost of an order into 8 weekly bite-sized chunks. I know that many of our clients feel more confident about being able to spread the cost of a print and design order over 8 weeks instead of having to find the money all in one go!
Offering an extensive range of handy options and plans is a win-win strategy.
Your customers will be more inclined to conduct business with you in the first place and you’ll be far more likely to get paid on time!
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So, are you an early bird when it comes to paying your bills to other businesses, or are you sometimes guilty of missing the boat?
How do you deal with late payments from your own customers?
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