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Credit control: A Guide for Start-ups
What do I do if a customer pays late?
Customers often try and delay payment. It is not necessarily a sign they are in trouble – they may just be putting off payment to improve their own cashflow. You should always call a customer the day before payment is due to confirm that you will be paid on time. You should know what to do in the following situations:
- A customer only pays part of the invoice. Acknowledge the part payment and get them to agree to a payment plan to cover the remainder (monthly payments, for example). Refuse to offer them any more credit until they pay off their balance.
- A customer has a problem with a part of the order. If a customer refuses to pay because they have an issue with one item on the invoice, require them to pay the rest of the undisputed invoice in full, then deal with the item separately.
- A cheque bounces. Call the customer immediately and ask for the balance to be paid using another method. Keep hold of the cheque to use as evidence.
- A cheque is incorrect. Again, call the customer immediately and ask for a new cheque.
- A customer consistently uses delaying tactics. Put them ‘on stop’ – refuse to supply them until the outstanding invoices are paid. Make sure your stop list is easily available and up-to-date.