It normally occurs within the world of B2B business. But there are certainly examples of this irritating phenomenon within B2C business as well. Sometimes, the invoice has been sent, the goods have been delivered but, when the due date comes along, no payment is forthcoming. How do you deal with such a situation as an ecommerce site? For the biggest ecommerce companies out there, this might not be a frequent problem, but for small- to medium-sized ecommerce businesses, the phenomenon of late invoices is certainly one that is frequently observed – and something needs to be done about it.
However, at this point, the small- to medium-sized business has to navigate the situation carefully. With B2B ecommerce, the path to success is to build up a good range of regular clients. If a client misses the payment date, the ecommerce business must find a way to chase up the payment without souring the relationship into the future. That can be a tricky business.
How New is the Client?
Before going on to some top tips for chasing up payment without souring the relationship, it is worth pointing out that, sometimes, this simply isn’t worth doing. fastFACTR, a company specializing in invoice factoring and other cashflow solutions, say that the most important consideration is to consider how recently you have acquired the client. If this is the first payment due from the client and they miss it, then chances are you do not have a particularly reliable or trustworthy client on your hands. It is then worth chasing up such a client a bit more aggressively and be done with the relationship thereafter. You need to build up clients, but they absolutely must be paying clients.
Tips for Chasing Up Payment
To that end, here follows some top tips for chasing up payment without jeopardizing the relationship:
Be Clear About Payment Terms
It might sound obvious but failing to make the terms of payment absolutely clear at the outset is not as uncommon as you would think. Furthermore, it is a sure way to run into payment trouble further down the line. And this trouble occurs precisely from misunderstandings and disputes that arise from this lack of communication. In short, it is nothing more complicated than setting out the terms of your business arrangement from the off. In other words, this is business 101 stuff.
Make Clear Late Payment Procedures
It is much better for a business relationship if, when a payment does not arrive on time, your message to the client begins, “as per our late payment procedure…” and not, “your payment is late, so I’m going to do this…”. The difference between these two email openers is the difference between making your late payment procedure clear from the off and failing to do so. Make the late payment procedure clear and the client will not see your actions as capricious punishment, but just something that they agreed to.
If you have a client who regularly pays on time and then is suddenly a few days late one particular month, then this is not going to cause a serious cash flow problem and it’s worth simply letting it go with no penalty. This all goes back to establishing trust with your clients and giving them some leeway in such situations will not only avoid souring the relationship but will positively improve it.
Ultimately, late payment is a problem for small- to medium-sized ecommerce ventures, but so too is losing clients. So much of business is about being tactful and diplomatic, so you should apply these principles to payment as well.