Have you ever been in a situation where the wait for money is never-ending? Well, it's a fact undeterred that, Cashflow is the lifeblood of a business, and it is also true that when a client pays late, entire flow of operation bears the repercussions. When a company fails to acquire payments, their suppliers go unpaid or underpaid, the salaries to the staff get delayed, and the utilities are compromised, along with the daily operations that run like clockwork. With cash flow being vitally important to the ongoing success of a business, how can small businesses manage their cash flow needs while they’re having to wait for their customers to pay them? Here are 5 ways to deal with late payments without cringing away your associates.

1. Know Your Customer


KYC or Know Your customer might sound a little cliché, but this is the best procedure for maintaining a good relationship with the client, while perpetuating a good repo with the businesses associate. If you know your customers, it gets easier to sort out payments and figure the process to chase overdue amount. There are certain things that a brand must ensure while they are seeking payments, they must begin with maintaining the existing relationship and assuring that no gaps take place amidst the companies. Let no frustrations hamper the business and revenues, especially if you are small business and have just initiated the venture.

2. Agree Payment Terms in Advance

A business can pre-empt the fluctuations in the cash flow by agreeing to invoice payments in advance. Although, there can be exceptions, and a business must keep themselves open to a certain level of flexibility since blue chip customers tend to insist on long payment terms that are standard across the business. If you are setting your foot into the procedure of long payment terms, implementing an invoice discounting facility or negotiating price discounts to improve the cash flow is always a good idea. This is how a company can extract some profits for prompt payments, but you need to carefully assess different options as well. While you are planning to onboard new customers it is recommended to send them contractually agreed on invoice payment terms for fostering an ongoing business relationship. The agreement must include:

The payment date: When you expect to be paid by the customer.

The invoice due date: Actual date on which the invoice should be paid.

The currency*: (If trading beyond national boundaries)

The payment methods: Such as credit card, bank transfer, Payment link etc.

3. Chasing Payment as they Overdue

It is a business’s right to be paid for services and product(s) it offers, so it is paramount that payment collection is taken care of proactively. It is crucial to swiftly respond and take appropriate action as soon as the payment is “overdue” but before everything, ensure that you are considerate of the late payment terms. Hold on! If you are under the category of small companies, and you are working in association with large corporates, you need to instil subtle negotiation. The worst action that a business can take to avoid late payments is to attempt enforcement action, which further sabotages relations and future business prospects.

4. Make Sure the Vendor Portals Function well

Implementing Online vendor portals is the latest trend followed by corporations irrespective of their size. But before implementing the portals it is extremely important to understand how these portals work and comprehend the right process for accepting purchase orders, issuing invoices, and putting in correct payment bank account details. Since everything is automated, you need to understand the protocol and keep the track in advance. With the evolution of FinTech, the industry is oozing with excellent payment aggregators, PAY10 is a name among the most popular payment gateways in India. With exceptional services, it caters to a set of diversified verticals, apart from this there are many reasons to associate with PAY10.

5. Scripted Email Reminders

Payment chasing emails are known to be one of the best tools to avoid late payments. These emails are auto generated, and there is no requirement to write and send. These emails need slight editing to personalise them and add invoice details. These scripted emails work as an advanced warning to remind the payee about the approaching due date of the invoice. You can also outsource the credit control to professionals who will take care of the responsibilities on your behalf.

Invoice Financing or Invoice-backed line of credit are short terms loans extended by a financial institution or a lender to its customers based on unpaid invoices. It also meets the short-term liquidity needs of the company. Using this feature, you can draw funds at the hour of need based on the outstanding invoice.

Let’s understand with the help of an example: If a company, say XYZ, is waiting on INR 1 lac in invoices to be paid, and the company needs to access cash, the invoice-backed line of credit will let it access about 80% of the money that the company is waiting to receive. Do not confuse it with the traditional business line of credit, as the company is not borrowing the funds but accelerating the cash flow without putting pressure on the customers. The company withdraws the funds that it needs before the customer has cleared the invoice and once, they make the payments the LOC is paid directly.

Now that you have come across the tips to deal with late payments, it will be easier for you to choose the right course of action for your business. With Pay10 excellent services, the issue of late payments can be catered, with thorough efficiency. We are the leading payment aggregator with Next-Gen technology, we not only aid in boosting your sales but also take care of your payments with end-to-end tracking and prompt notifications. For more information visit our official website or talk to out executives.