With the pace of today's modern world being as busy as ever, it can be inconceivable that some things in life run at a much slower tempo than the one to which we are accustomed. In fact, when things are slower than we anticipate, we react with either alarmed curiosity or outright frustration, depending on how these slow-paced novelties affect our lives.
When late-paying customers are one of the slower than normal details with which you are dealing right now, you may try to temper your own frustration by remembering that everything in life cannot run on your time clock. Even so, you can safeguard your business by knowing what steps to take to overcome the late payments that could put your company at financial risk.
In fact, some things in life are expected to be drawn-out, simply because of what they are and how they were designed. For example, you can appreciate these slower than normal anomalies that include:
- A sloth that moves less than 10 feet per hour.
- A blue whale that has a heartbeat of four to eight beats per minute.
- The organ concert designed by John Cage, which began in 2001 and is expected to conclude in 639 years.
- Ernie Lombardi, the baseball player whose 300 pound weight made him one of the slowest, yet greatest MLB players of all time.
- The American woodcock bird that only flies up to five miles per hour.
You can regard these oddities with a certain amount of amusement and curiosity, simply because they do not directly affect your personal or professional life, as well as your profitability. However, when the biggest risk to either of these areas of your life is threatened by slow-paying customers, it is imperative that you know how and when to act to protect your business. You can keep your business in good shape by taking any of these proactive steps to overcome clients with tardy payment histories.
Begin Collection Activities
As much as you may not want to pursue this action, sometimes taking collection actions against your delinquent clients is necessary. You can start by sending out late payment notices and then move onto phoning them or sending their accounts to a collection agency.
These actions are time consuming and can be expensive. Nonetheless, they may one of your options when you are resolved to collecting the money that these people owe to you.
Raise Your Prices
This step may be necessary to recoup some of the financial losses you have incurred because of delinquent customers. Because they pay their bills late, these clients must compensate you by paying higher prices, thereby allowing you to keep doing business while you wait for them to cure their accounts with you.
However, this action also hurts customers who are loyal and who have good payment histories with your business. If you raise your prices to punish one or several customers, you could turn away clients on whose business and good payment habits you have come to rely.
Factor Your Invoices
When you absolutely cannot afford to wait for your delinquent customers to settle their accounts, you can always factor your invoices and get the money you need to remain profitable and in business today. A factor can buy your invoices at a discount, thereby giving you the money you need to sustain your company's cash flow. You can stay in business like normal without having to wait until those accounts are paid in full.
In fact, a healthy cash flow is vital to your company in several ways. Your cash flow may be used to:
- Pay your employees
- Buy supplies and inventory
- Pay your business' utility bills
- Expand your company and reach new clients
Without this supply of money, your business will become stagnant, if not shrink entirely. Rather than face such a financial risk, you can use factoring to your advantage and overcome the challenge of slow-paying customers.
Some things in life are built to run slower than usual. However, your business ideally should run at a pace that brings you the money you need to remain profitable and sustainable. When you wonder how you can deal effectively with late payments and tardy customers, you can find your ideal solution when you rely on factoring.