6 Proven Strategies for Avoiding Late Payments and Cash Flow Problems​

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6 Proven Strategies for Avoiding Late Payments
and Cash Flow Problems
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Impact of Late Payments

• Late payments can obstruct the smooth running of
  a company, and while overdue invoices may only be
  for a few clients, they can have a significant
  effect on the service provider. Especially for
  smaller businesses that have a challenging time
  cycling their own cash, big organizations that do
  not pay their dues on time can create a more
  significant issue.

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Tips to Avoiding Late Payments and Cash Flow
Problems
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Do a Thorough Background Research

• A thorough background check before offering your
  services to a business can help you dodge bad
  deals and react to critical risks to find their
  solutions. Business Credit Health Check can be
  crucial to offer credit terms to a company
  according to its current creditworthiness

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Chase Overdue Payments Politely

• Many small businesses are afraid to chase their
  overdue invoices out of being taken as rude or
  betraying their relationship with bigger firms.
  However, if you experience late payments from a
  company that was regularly paying initially, you
  should not get swayed by the initial habits and
  stick to the terms and conditions mentioned in
  the contract.

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Manage Your Late Invoices

• To get your payments on time, you should further
  create and send your invoices as soon as the
  client receives the service or product. Make sure
  the generated invoice is in the format requested
  by the customer, complete with all the essential
  details. Track your invoices as soon as they
  become overdue and chase them to get your
  customers to pay.

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Create a Separate Vault for Contingencies

• Even after building a revenue forecast,
  unexpected events can occur at any time, and you
  may need your credit risk management solutions.
  You should be prepared for such times by finding
  funding resources within the business, like from
  retained profits that remain undistributed to the
  shareholders. 

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Offer Early Payments Incentives and Late Payment
Charges

• It is common for businesses to offer incentives
  like discounts and reimbursements if the client
  clears their invoice early. Many companies also
  charge late payment fees from companies, and many
  laws allow small businesses to incur interest on
  overdue invoices.

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Follow the Payment Behavior of Your Client

• Every business, whether small or large and B2C or
  B2B, can face challenges that can affect how they
  pay you for your services and products. Monitor
  your clients behavior to understand if you can
  have risks by continuing your business with them.

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Thank You

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