If you own a Kansas business, getting your clients to pay on time is a high priority for you. When a customer pays for your product or service, you, in turn, can pay your employees and vendors as well as your rent, utilities and other expenses that keep your business running. A customer who is late with a payment or who simply will not pay can create a domino effect of frustration and difficulty.
You have a right to the payment a customer owes for work you completed or a product you delivered. You can improve your chances of getting paid in full on time by taking certain precautions. Additionally, you can take steps to recoup payment from a delinquent customer.
Making a plan for payment
Having a procedure in place for collecting payment from clients is the most efficient way to protect your interests. You may take the time to research a customer online before accepting his or her business. Doing a quick search may reveal if customers have bankruptcies or previous lawsuits for delinquent payment that make you hesitate to do business with them. If you decide to continue with the transaction, you may consider requesting a deposit or installment fees.
In the event that a client does not pay despite numerous attempts to collect, you have some options to consider, including the following:
- Exhaust your efforts to work with the client. Perhaps the client is dissatisfied with the product or service, or the client may be in the middle of a personal emergency that demands a little more patience.
- Decide whether it is financially worth it to spend your company’s time and resources pursuing the payment. In other words, will you pay more to collect than the invoice is worth?
- Send a letter of demand to your client. It is often more effective if the letter comes from an attorney, and you can obtain some sound advice from a legal counselor about the best course of action.
If your customer contract does not already include an outline of the procedure for collecting payment, you may wish to consider revising your contracts. In this way, you can inform your customer up front about the steps you will take if the client does not remit payment in full and on time. This may include a schedule for collecting payment in installments, the type of payment you accept, and your policy for adding late fees or taking other action for unpaid invoices.