Published On: Tue, Oct 24th, 2017

What to Do When a Business Partner Is Late With Payment

If you’re lucky enough to be the owner of a small business, you know that cash flow can be problematic from time to time, especially in the early stages of your company. So you might be sympathetic when some other business with whom you deal is struggling so much with their own cash flow that they are delinquent on their account with you.

photo 401(K) 2012 via Flickr

By the same token, your own business needs that money coming in on time to continue its own operations. As a result, you have to have a policy in place to deal with these problems, lest your own business suffer. There has to be some combination of firmness and understanding on your part, always while keeping in mind the absolutely crucial nature of these payments to your business.

If you allow the most payment options available to the company who owes you, you increase your chances of being paid. Make sure that you accept cheques because paper cheques are an extremely popular method by which small businesses make payments. Here are some other helpful hints on how to handle this uncomfortable situation.

Each Case Is Different

It may sound like good advice to have a hard and fast rule for dealing with delinquent accounts. But as anyone who has ever received B2B payments can tell you, no two accounts are the same. You might be dealing with a buyer who has established a reliable business relationship with you for years and, by some calamity or misunderstanding, comes up short one month. Leniency might be in order in a situation like this. By contrast, a buyer who is late for every scheduled payment should be given a very short leash.

Establish the Right Tone

Knowing how and when to approach the company who is responsible for payment is a crucial component to handling these situations. Firmness in tone is crucial so that the payer knows that there will be consequences to not paying on time. But a wild, raving letter or email is likely to have just the opposite effect of what you desire. Keep the language as polite and understanding as possible. Just make sure the terms are clear and that, again, the receiver understands what is at stake is they don’t make the proper payment in the desired amount of time.

Be As Flexible As Possible

Just as you need to allow for cheques as a possible method of payment for those businesses that prefer them for their convenience and familiarity, you should also try to be as flexible as possible when you can in other areas. If you’re relying on a payment to be there the exact minute it’s due every time and enforces this maxim with as firm a hand as possible, it could give you a bad reputation in the business community. Try to put yourself in the payers shoes and give them the benefit of the doubt until they abuse that privilege.

Ideally, you won’t have to deal with too many delinquent accounts. But knowing what to do when they crop up can save you, the business owner, and a lot of unnecessary stress.

Author: Matthew Perry

On the DISPATCH: Headlines  Local  Opinion

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  1. The Advantages of Tailoring Your Business to the Luxury Market | Entrepreneur Podcast Network - EPN says:

    […] even if the rest of the world is scrimping and saving. And you likely won’t have to worry about late payments from those with such […]

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