Small businesses often operate on tight margins, particularly in the beginning. This means that they require prompt payments to survive, and delayed payments can really take a financial toll.
Fortunately, as a small business owner, you do have legal rights. There are also certain steps you can take to improve your chances of being paid. Here are a few things to consider.
Consider an extension
While long extensions are typically unfeasible, short extensions on payment dates may suit all parties. An extension still sets a clear payment date, but it also shows that you are understanding of your client’s issues. This can be a better option than immediately litigating and potentially isolating your client.
Keep communication lines open
While a missed payment can be frustrating, there are often innocent explanations. Sometimes, for example, a client may have simply forgotten to make a payment. Or, perhaps their accounting department made a clerical error that can be cleared up quickly. Keeping communication lines open as much as possible is always beneficial when dealing with missed payments.
Terms in contracts
The contracts you have in place with clients should also provide strategies for collecting payments. For example, you may include a term that offers a discount for prompt payment, which incentivizes clients to pay earlier. Or, you may try a different strategy and include extra fees for missed payments.
If your small business has not been paid by a client, then you do have legal options. Collection laws can be tricky to navigate, so it’s essential to have legal guidance behind you before making any moves.