How to Avoid Late Payments
March 2, 2018
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Late payments disrupt small businesses’ activities. Waiting around for your business partners to finally fulfill an overdue payment costs your business money, time, and resources.
According to a recent study involving over 3,000 small businesses in more than ten countries, 10% of business payments is overdue at any given time
Find out how you can avoid late payments, and how Veem can help.
According to a recent study involving over 3,000 small businesses in more than ten countries, 10% of business payments is overdue at any given time. And even more worrying is the fact that a good 10% of all late payments are never fulfilled.
More than 30% of small businesses expect late payments to have a bad effect on their operations, including lost revenue and time. According to the study, small businesses spend about 15 business days each year chasing after late payments.
More than 30% of small businesses expect late payments to have a bad effect on their operations, including lost revenue and time
But for many businesses, that’s simply not an option. Most don’t have the manpower, while others fear damaging the business relationship if they push too hard about an overdue invoice.
Why the late payments?
In an ideal world, late payments don’t happen. Interestingly, over 30% of payers who admitted to occasional late payments didn’t list a reason for letting an invoice go overdue. Another whopping 30% claimed that even though they made the payment in time, the transaction was pending for an inexplicably long time.
Interestingly, over 30% of payers who admitted to occasional late payments didn’t list a reason for letting an invoice go overdue
That 30% may be on to something, since the banking system is not known for its swift actions. Read our blog The Hidden Cost of Credit Cards for Small Businesses for more information on that topic.
Successful tactics to avoid late payments
The best way to avoid late payments is to simply prevent them from happening. Trust us, it’s easier than it sounds.
Lay down the law
When negotiating a new business partnership, don’t be shy about mentioning late payments. Be as frank about your payment terms as possible without being rude.
Be as frank about your payment terms as possible without being rude
Nobody likes overdue invoices, so chances are that your potential partner will appreciate your honesty and accept your terms. Especially if your payment schedule is directly linked to your services.
Of course, mishaps happen. Maybe your otherwise reliable business partner had a bad month, or their cash flow is limited by a late payment of their own. Being compassionate once in a while is not the same as tolerating regularly overdue invoices.
That said, having clear payment terms in your business agreement can help prevent late payments and create a strong, fair foundation for your business relationships.
Communicate more effectively
Some late payments are simply the result of miscommunication. For example, the invoice lands in the wrong person’s inbox. Or your usual contact is out of office and nobody has access to their files.
Don’t hesitate to ask who’s responsible for sending payments and make sure to contact them directly with each invoice.
Don’t hesitate to ask who’s responsible for sending payments and make sure to contact them directly with each invoice. This is the best way to avoid delays and mishandled invoices.
Let there be consequences
Don’t put up with regular late payments. Be clear about what actions you will take if your business partner is overdue on their invoices on a regular basis.
Provide a payment method that allows your business partners to easily pay your invoices. If you work with business partners overseas, the fastest and most convenient payment method is Veem.
Veem is the next generation B2B payments platform, allowing you to send and receive international transfers quickly, securely, and as easily as sending an email.
Creating a direct connection between you and your business partners, Veem cuts out the middlemen (i.e. a string of unknown banks sending your payment along its long route). This eliminates all uncertainties from the process, including hidden fees and unexpected delays.
In addition, Veem offers competitive foreign exchange rates and charges no wire fees.
What’s not to love?
Sign up for a free Veem account and eliminate late international payments.