How to avoid late payments
Not getting paid on time can have a big impact on businesses, disrupting cash flow and affecting your liquidity. From keeping track of payments owed to you to making sure you pay suppliers on time, here's some quick tips to avoid the hassle of late payments.
1. Set your payment terms
Setting out the terms of your payment are a must when selling goods or services to your customer. It’s important to make the due date of your payment clear to your customer on your invoice, so they know when you expect to be paid.
2. Charge interest
Charging interest on overdue payments is a great way to encourage your customers to pay on time. In the event of a late payment, you will be compensated and it will discourage your customers from paying late in the future.
3. Keep track of your finances
Choosing an accounting software that lets you keep track of your accounting and invoices in one place can have a lot of benefits. You’ll be able to see when your invoices have been delivered, if they go overdue and record your payments with your accounting. Plus, you’ll have an overview of what money is coming in.
Having a close eye on your cash flow can give you a better overview of how your company is performing, any customers with a habit of late payments, and if there are spare funds you could use to help grow your business. Using reports to look at a breakdown of your finances and where funds are allocated is a great way to do this.
4. Send a reminder
If the payment you’re expecting is late, don’t worry. You can send a polite reminder email to encourage your customer to send the payment. If you’ve added interest to your payment, be sure to include this on an updated invoice when you send your reminder.
5. Don’t be a culprit
Maintaining a good relationship with your suppliers is important, so make sure you are paying them on time too! Make sure your accounting software will show you when your supplier invoices are due for payment so you can keep track of them and plan your finances.
6. Keep invoicing simple
With Bokio accounting software, you can create invoices for free, and email them to your customer directly from the app, or download a PDF copy. The invoice generator is comprehensive, and of course includes the due date for your payment and adding interest to overdue invoices. Plus, you can send reminder emails to your customers with just a few clicks.
Keeping track of your invoices used to be a hassle, but not with Bokio. You’ll receive reminders when the invoice is due, and you can record when the invoice has been paid and if it has been overpaid. You can also keep track of your supplier invoices too.
Updated March 2021