How to handle late Payments by Business Partners in a Professional Way
Maintaining healthy relationships with business partners is essential for long-term success. However, one common challenge that can strain these relationships is late payments. Late payments can disrupt your cash flow, hinder your ability to meet financial obligations, and even lead to frustration and tension between you and your partners. Yet, it’s crucial to address these situations in a professional and constructive manner to preserve your partnerships and reputation.
In this post, we will explore effective strategies and best practices for handling late payments by business partners professionally. Whether you’re a seasoned entrepreneur or just starting in the business world, these insights will empower you to navigate late payment challenges with confidence and integrity, ultimately strengthening your business relationships and financial stability. Let’s dive in and discover the art of managing late payments with finesse and professionalism.
Marshal Davis
President of Ascendly Marketing
https://ascendlymarketing.com/
A standout lesson from my journey came from a challenging situation with a key client about two years ago:
Despite clear terms, this client repeatedly delayed payment. It was a delicate situation that required me to be firm yet diplomatic. Our business’s financial health was at stake, and I knew I had to act. We initiated open communication with the client, explaining our position, and proposing a detailed payment plan. To further streamline the process, we introduced an invoicing solution that provided real-time updates, automated reminders, and allowed the client to pay in installments. This not only salvaged our relationship with the client but increased our revenue by 30% within that fiscal year on other business. It shaped our future approach, realizing invoicing is just as much a marketing function as every other aspect of our business.
Percy Grunwald
Co-founder of Compare Banks
https://www.comparebanks.co.uk/
Early in my entrepreneurial journey, I encountered a situation where an
inefficient invoicing system led to confusion and delays in payments. It was a stark reminder of the critical role that clear invoicing plays in maintaining healthy client relationships and sustaining the financial stability of a business.
The challenge emerged when a client failed to receive a detailed invoice on
time due to a glitch in our system. This resulted in payment being delayed,
and it created an air of uncertainty that strained our otherwise positive
working relationship. Recognizing the importance of addressing the issue
promptly and professionally, I decided to take a firm yet polite approach.
I reached out to the client, explaining the situation, acknowledging the
inconvenience caused, and assuring them of our commitment to rectify the error. Navigating this challenge taught me the significance of transparent
communication in invoicing matters. While it required a certain level of patience to work through the situation, being insistent on resolving the issue showcased our dedication to exceptional client service. By taking
responsibility for the oversight, we not only rectified the problem swiftly
but also strengthened our client’s trust in our professionalism.
As a result of this experience, my future plans for our company’s invoicing
solutions are geared towards streamlining the process to minimize any chance of errors. We’ve invested in a more robust invoicing software that
offers automated reminders, detailed breakdowns, and easily accessible records for both us and our clients. Clear communication and efficient
invoicing have become integral parts of our client interactions, ensuring
that misunderstandings are minimized, and payments are processed promptly.
This lesson underscored the importance of a well-structured invoicing
system, which not only enhances client relationships but also contributes to the financial well-being of our business.
Nicolas Camhi
Co-Founder of Vambe
In our early stages, we faced a challenging situation with a client’s unmet invoices. While our invoicing system was efficient, it lacked a nuanced
approach that balanced firmness with politeness. The client repeatedly missed payment deadlines, and our automated reminders seemed inadequate to convey the urgency yet maintain a respectful tone.
The challenges were…
Striking the Right Tone: Crafting reminders that were both assertive and
polite.
Building Trust: Ensuring that our approach nurtured, rather than strained, our relationship with the client.
Ensuring Timely Payments: Implementing a strategy that would not only request payment but effectively secure it.
Resolution: We overcame these challenges by personalizing our reminders, adopting a respectful yet firm tone. We also introduced a transparent communication channel, allowing the client to engage with us directly if they had concerns or needed additional time.
Future Plans: Inspired by this experience, Vambe plans to continually refine our invoicing approach, enhancing our software’s personalization capabilities. We recognize that every client is unique, and our system should adapt to respect and respond to those individual needs.
Nishat Rustagi
Founder of makerstage
http://makerstage.com/>http://makerstage.com/
I’m a start-up founder with 5+ years of experience in San Francisco in the digital manufacturing and supply chain space.
It’s in the B2B space and I am familiar with various issues regarding invoicing from pretty much every day whether it’s from manufacturing companies (customers) or from our manufacturing vendors in the US.
I’ve learned the value of automation to help me handle inconsistent invoicing etiquette and standardize the whole process.
Esther Kiss
Born To Influence
esther@borntoinfluence.com
In our company, we have done away with invoicing, almost entirely. Instead, we set up an agreement with two payment options: a pay-in-full amount or a set number of monthly payments, the sum of which is 10% more than the pay-in-full amount. The agreement also details out how we would handle the unlikely scenario of a refund, especially important for any pay-in-full clients. The new client signs the agreement and clicks a link to a checkout processor, where they select their payment option, and submit their own information. Then, the payments are then handled automatically. Our merchant processor account withdraws either the pay-in-full amount from their credit card or sets up monthly draws for the payment plan.
Our clients actually prefer this, so they don’t have to pay invoices, and our team’s time is freed up from invoicing, entirely. We do, occasionally,
need to reach out to someone for a credit card expiration or similar, but then we’re only reaching out for failed payments, not all payments. When we do reach out, we always do so in a way that provides the benefit of the
doubt that the payment failure was a fluke. It’s never the client’s fault — always a technological glitch.
All-in-all, though, setting up payment plans on credit cards is more convenient and efficient for everyone! And if someone would prefer to
transfer the pay-in-full amount via wire or ACH, we can easily send them instructions for that, too. You’d be surprised how many people are happy to set up credit card payments or simply wire money to you!
Charlie Wright
Operation Director at EposNow
In my role as the Operations Director at Epos Now, I’ve garnered a crucial insight regarding invoicing etiquette for small business proprietors.
Effective invoicing hinges on swift and lucid communication. Timely dispatch of invoices containing comprehensive particulars curbs confusion and obviates payment delays.
Furthermore, sustaining a professional demeanor in all correspondences related to invoicing cultivates a positive rapport with clients. Exposing
payment terms, due dates, and potential supplementary fees transparently nurtures trust and averts misconstructions.
Addressing payment concerns or disparities promptly and courteously underscores a dedication to customer contentment. By upholding these invoicing etiquettes, we not only streamline financial procedures at Epos Now but also contribute to nurturing robust and enduring associations with our esteemed clientele.
Antonio Wells
CEO of NAMYNOT Inc.
I have a few horror stories, but I’ll condense to the best two cases:
1.) In the past, we had a client that paid the invoice slowly and ultimately charged back, receiving a forced refund. We appealed it and lost. We contacted the client repeatedly and, of course, were ignored.
So, we decided to use the power of our SEO and website to get the client to respond.
How? We created an article with the facts of the matter. In essence, we called out the business owner, their company, and their lack of professionalism.
We left the post, and a few months later, our phone and email started blowing up from the client and their so-called attorney claiming libelous
statements- threatening to sue us. Their potential client Googled them and found our article. When they Googled their name, the article was #1 in search. Quite embarrassing.
We stated they could pay the chargeback amount plus a fee via cashier’s check, and the content would be removed. They paid us swiftly, and we
removed the article promptly.
2.) We had a few cases where a company was approved and purchased our marketing services but failed to pay their invoices. Since we report to the leading business credit bureau, Dun & Bradstreet, it behooves our clients to pay invoices late.
Once we report late payments and the client’s business credit score drops, it prevents them from securing future financing. Thereafter, our phone and email start buzzing to pay with requests to remove the late status.
Yousef Abubakr
CEO of Arab Query
*The Science of Relationship Building:*
My most treasured client fostered a friendship and professional relationship within the fire of my time as a web developer. In the middle
of the monotony of daily business, a novel idea was put into motion: traditional bills would be replaced by canvases of thanks. Along with a
brief but sincere letter of thanks for their continued support, everyone included a thoughtful, individual reflection on the project’s completion.
The effects of this small effort were far-reaching, reviving a transaction by bringing together more personal and business-like levels of interaction.
The invoice transformed into a container that could hold not just monetary exchanges but also the resonance of generosity, cementing a bond of loyalty and friendship.
Abdullah Zafar
Head of Marketing
*Clear provisions for the protection of interests:*
My career path unfurled as a consultant toward a young company that really needed my experience. Work scope and financial agreements were laid out in great detail. However, the story went off on a different track than expected. After the deadline had long since faded from memory, it became
apparent that there was no obviously stated penalty for late payments. With the slow payment coming in, it became clear that invoices needed more detailed terms and conditions. This legal arsenal not only protects clients’ rights but also works as a signpost indicating promptness to customers. Incorporating provisions detailing the implications of late payments stabilizes the fiscal pendulum and builds a fortress of professionalism.
Yuval Eizik
Founder & CEO, yuvaleizikblog.com
In the formative years of yuvaleizikblog.com, my primary focus, like many
other entrepreneurs, was content, marketing, and expansion. However, I soon
confronted the practical challenges of running a business — specifically,
the art of invoicing. One incident stands out as a pivotal lesson in my entrepreneurial journey. We delivered a comprehensive AI analysis project for a reputable client. Given our budding relationship and the size of the contract, I naively assumed a prompt payment post-delivery. Weeks turned into months, and gentle reminders seemed to vanish into the abyss of their corporate bureaucracy.
One day, after a particularly taxing wait on a conference call, I decided it was time to marry politeness with firmness. I wrote a concise but assertive email outlining the value we delivered, referencing our agreement, and emphasizing the importance of trust in fostering long-term business relationships. To my surprise, the invoice was cleared within a week, and the client appreciated my straightforward approach and assured me such delays wouldn’t recur.
This episode taught me the essence of invoicing etiquette: Always be clear about payment terms from the outset. Please review and refine your invoicing system regularly to ensure it’s clear and prompt. While trust is
the foundation of business relationships, you should always be direct when needed. At yuvaleizikblog.com, we have incorporated an efficient, automated invoicing system that sends out polite yet firm reminders at regular intervals. This seamless system has not only improved our cash flow but has also reinforced our brand as professional and reliable.