It can be a gut punch for any business manager. You put in the hard yakka just to have customers that won't pay up. You can’t get back the money spent on time and components, and you are left fronting the costs.
While it’s an unfortunate inevitability, there are a few things you can do to limit the chances of runaway customers.
Here are the top 5 ways that can help you get paid for work done when you frequently have customers that ghost you.
A lot of business transactions rely on trust, no matter what the service is. From buying from a supplier to performing a service for a consumer, there is faith that the service provided will be satisfactory and payment will be made.
When asking for payment - whether full or partial - in advance you’re asking your customers to take a leap of faith that you will deliver work as promised. It can be a lot to ask, but if you work in an industry that sees a lack of payment frequently, then taking a deposit or payment in advance can be the way forward.
When you have an established relationship with clients, you may want to extend credit terms, but for new customers getting payment before work is done can give you peace of mind and ease up your cash flow.
While it might not help in every case, having robust, signed payment terms can help you resolve nonpayment issues down the line. By easily being able to show that the customer agreed to the pricing and terms around payment, you may be in a better position to claim that money later.
Using signing portals and similar tools to make it easy to get a signed copy of the agreement can help put you in a good position if disputes happen down the line.
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No matter if it’s businesses or consumers you target, everyone likes an easy experience. Making it easy for your customers to pay means they have fewer reasons to avoid payment (either maliciously or just through putting it off).
This can mean a few updates to your processes, including making sure you have adequate payment methods available to support how they do business. It may make sense to offer credit terms to clients to help them manage cash flow easier or using a mobile EFTPOS machine for fast payment.
This convenience when paying up can help to add on to the customer’s experience, creating greater overall satisfaction with their purchase also. Think about the impact and cost these might have on your business, and how that weighs up against the convenience for your customers and the higher payment rate you may be able to expect.
Another way you can make payment easier is with clear and consistent milestone invoicing. Creating clear and easy to follow milestones for your larger projects can help your customers pay-as-they-go and avoid a large single hit to their cash flow. Customers can rest easy when they trust that you are only invoicing for work done.
If you find a pattern of nonpayment with your customer base, it might point to some underlying issue within your business that’s hidden from you. Try to have the opportunity to have an honest and calm conversation with your poor-paying customers.
It might be that there is a consistent underlying issue that is causing dissatisfaction, from bad interactions with on-site staff or poor materials being used. Or, it might just be that the customer doesn’t appreciate the cash flow needs of your business and might not understand the huge difference it can make to a business to pay on time. Having conversations beyond following up on the payment can help you avoid non-payments in the future.
Get more advice on what to do when you haven't been paid by a customer for client, check out this article by business.gov.au