Steps to recover debts from customers as a business owner

Maintaining good cash flow is vital to any business financial health, but late-payment can present a serious issue. So what can you do when customers don’t pay on time? Here are practical steps to take to recover overdue payments.

First step

The first thing to remember is that late payment is very common. In fact, 53% of small businesses are owed money from late payments. The first thing to do is speak to the client to establish why he or she hasn’t paid.

Business experts say sending a gentle reminder is not a bad idea. It’s not too pushy because often, people actually like to be reminded.

Second step

You can follow up with a call to confirm when payment will be received. If you are still unsure, you can always have another look at their credit record to see if anything has changed. Whether account numbers are still the same or has changed.

The accounts department may be yet to process the invoice, or it may simply be lost. In these cases, a simple call is often enough to rectify the problem.

Third step

There is no fixed time to wait before taking the next step to recovering your money. If your communications are being ignored and the outstanding payment is beginning to impact your cash flow, then you should have no hesitation in escalating the issue. Experts emphasises the importance of establishing terms and conditions before entering a business relationship to avoid any future difficulties.

Fourth step

“Place the customer on pause”,. Once a customer realise they won’t receive any further goods or services from you, this can spur the customer to pay.”