Avoiding Bad Debts Part 2: Clearly Mark the Due Date.
A Lannister always pays their debts.” – Game of Thrones
One of the most famous mantras in the popular television series ” Game of Thrones” is, “A Lannister always pays their debts”. Even the ‘bad guys’ in Game of Thrones know that they have to pay their debts if they want to continue operations.
In the real world, it’s a universally accepted belief that everyone has to repay their debts. Even individuals who don’t pay their debts expect to get paid what they are owed. And yet one of the unfortunate experiences that many business owners have is dealing with a customer who has no intention of paying for the products and services they receive.
Of course, some customers will have genuine difficulties when it comes to making ends meet. Business owners sometimes lose customers, lose key employees, get divorced, or become horribly ill. Bad things do happen to good people. But even in these cases, you will usually find that the customer is willing to work out an honest repayment arrangement with you. These customers need your help, and they will be truly grateful when you can extend them special consideration.
But it’s a sad reality that there are people who will happily take advantage of every benefit you have to offer and when it comes time to pay, they make an excuse or just simply refuse. These types of people will give you ‘the runaround’ by intimidating, manipulating and guilting you every step of the way. They have a single objective, to get away with as much as they can.
But there is good news! What they can get away with can be limited by how you handle the situation. The key to dealing with customers who refuse to pay is to stand your ground. Be professional, be polite and keep referring to your payment policies and the original transaction agreements. It will inform your non-paying customers what the negative repercussions will be if they refuse to pay. And by making a small but significant change in your invoices, you can improve the timeliness in which customers pay.
Provide customers with a deadline
One of the most important aspects of receiving payment is to provide customers with a deadline. It seems like common sense, but many business owners fail to list the due date on every invoice they send out. Sometimes invoices ambiguously state, “payment due upon receipt.” Other business owners may choose to use language such as “net 30 days” , “net 15 days” or any other time period in which you expect the customer to make payment. But this leaves the payment due date up to the customer’s interpretation.
Placing a specific due date tells your customer to include payment in a current or upcoming payment cycle. By making the due date specific, you take out the risk of ‘customer interpretation.’ If you do not place a due date on the invoice, the business or individual may wait a month or two before paying you, especially if their cash flows are in a tight spot.
Don’t wait 30 days to invoice
The other important aspect to invoicing is not to wait 30 days from the date of sale or delivery of the product to send out a invoice. In general, you want to send out invoices as soon as possible. But for business efficiency, you may want to invoce all of your customers on a 15 or 30-day cycle. Just keep in mind that the sooner you send out the invoice, the sooner your customer will pay. After all, it’s unusual for a customer to rush you in the processing of invoices.
So if you aren’t already, clearly mark the due date on every invoice you send. It will help you avoid confusing customers on when payments are due, prevent you from making accounting errors, and will help you keep customers honest.
We hope that you find these invoicing suggestions helpful and informative. And when you have debt collection issues and need someone on your side, or maybe you want a better understanding of how you can recover bad debts, know that Collect My Debt Ι CMD Enforcement is your go-to expert. Please feel free to contact us today through our website, email, or by phone. Our representatives are available to help you today.