5 Business Tips to Overcome Deadbeat Customers

Watch out for these red flags

business tips
Customer paying for coffee with credit card digital tablet reader

You’ve sold the product or provided the service to a customer. Now it’s time to receive payment. The deadline for paying the invoice has passed. You’ve not heard from the customer, so you decide to contact the person by phone. The customer agrees to pay you within a week. However, a month has passed since that conversation, and you haven’t received payment.

To avoid such scenarios in the future, use these five business tips.

 

Choose Your Customers Wisely

 

Before a customer orders goods or services, you can identify the type of person with whom you’ll be doing business. Signs of a potential deadbeat customer include a demanding, vague, and uncompromisable demeanor. If you do not have an inclination to do business with this person, it’s best to decline.

If you’re just starting a business, declining a customer may seem like a challenge. You may be wondering where you’ll get more clients since this person is the first to arrive in your business. While it may appear rewarding to accept this customer in the short term, this mistake may end up costing you more in the long run.

 

Receive Your Payments Upfront

 

This is one of the business tips that may seem obvious. However, there are many business owners who are omitting this rule from their business. Whether it’s out of fear of not getting more clients or simply their preference, getting paid before the product is sent or service is rendered will save you the time and hassle of having to collect what is rightfully yours. If you’re selling products or providing services on the internet, use cash-on-delivery payment system.

 

Add Interest to Overdue Invoices

 

Include a statement on your customer’s invoice indicating that interest will be charged if he/she fails to pay the invoice by the deadline mentioned. Make sure that this is included on the invoice before sending the invoice to your customer. Many states forbid interest charges especially in cases where business owners haven’t warned their customers beforehand.

 

Take the Upper Hand in the Matter

 

As the business owner, you can withhold certain privileges from the customer. These include services, files, or other property. This is legal in most states. For example, a client has hired you under a work for hire agreement where all the work would become the property of that client. It is recommended that you add a stipulation to the agreement, indicating that all work would become the property of the client once all payments are received.

 

Contact the Billing Department

 

This is applicable to large companies. Ask to speak with a representative in the billing department. Once you’ve reached that person, provide him/her with information about the situation. Then, ask for payment to be made by a specified date. If you do not receive payment by that date, then contact top management. Your decision to contact the managers of the company will demonstrate the gravity of the situation and the importance of paying the invoice right away.

Once you follow these five business tips, you’ll eventually overcome the deadbeat customer scenario.

This article was written by  and originally appeared on DUE.com.

 


William Lipovsky owns the personal finance website First Quarter Finance. His most embarrassing moment was telling a Microsoft executive, “I’ll just Google it.”

Due is a payments, eCash, online invoicing, time tracking, global payments, and digital wallet solution for freelancers, small business owners, and companies of all sizes.