How to avoid late payments

As a business trading on credit terms, late payments from your customers can throw a huge spanner in the works, especially in the current economic climate.

Implementing some of the strategies below will be a great starting point to avoid being paid late:

Establish clear credit policies

Starting with the basics, make sure to establish and communicate clear credit policies, including payment terms, credit limits and the consequences of late payments with your customers. 

Credit check new customers 

Make sure you perform thorough credit checks on potential customers before extending credit. Use credit reporting agencies and review the customer’s financial health and payment history. With a credit insurance policy, this will be taken care of for you by your provider!

Invoice promptly and accurately

Send your invoices promptly after delivering your goods or service to avoid adding any delays. Ensure your invoices are accurate, itemised and include clear payment instructions.

Incentivise your customers

Consider offering discounts or other incentives for early payments to encourage your customers to pay before the due date. Or alternatively, you could implement late payment fees to act as a deterrent. Just make sure that the conditions of these incentives are clear for your customer.

Make use of regular reminders

Send regular payment reminders leading up to the due date. These could be via email, automated systems or by picking up the phone.

Build strong, personal relationships

Regular communication with your customers will allow you to build and maintain strong relationships. This will allow transparency between both parties and can help address any potential payment issues before they become problematic. Strong relationships are key to achieving positive outcomes.

Consider credit insurance

Taking out a trade credit insurance policy, with an insurer such as Atradius, means that you are protected against the risk of non-payments. So, if even after taking steps like those above, your customer won’t or can’t pay, you’ll still get your money. 

Implementing these strategies will help you to reduce the risk of late payments and allow you to maintain a healthy cash flow.