Combatting Non-Payment

In a business like factoring where everything depends on invoices being paid, non- or slow-paying clients can have a big negative effect on operations. In an article on Inc.com, Margaret Heffernan, CEO of InfoMation, offers a few tips on how to deal with customers  who won’t pay.

Schedule Payments: One way to make payment easier is to break the project up into small segments and have the customer pay along the way. Problems that arise early are easier to fix than those that arise later, and customers will feel more in control of their incurred costs.

Upfront Payment: If you are committing resources, then so should your customer. Don’t be afraid to ask for payment up front, and be honest about your company’s needs. Heffernan suggests putting money into an escrow account, but says it depends on the business and what they think would best suit their needs.

Discount for Upfront Payment: This option has the advantage of giving customers a reason to pay upfront where otherwise they may not. This may entice your customers to pay first, which could eliminate trouble down the road.

Conduct Research: While you can run credit checks, Heffernan suggests doing some primary research and asking about the client in and around their networks. A previous connection is bound to have an opinion one way or another about the potential client.

These are just a few ways to address payment problems before they happen, which of course is the best way to address any problem. The policies you put in place beforehand can save you headaches down the road.

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