Late payment risks, how to future proof your business

Late payments are a risk to businesses for many reasons. It is important as a business to not only future-proof your business goals and create plans on how to achieve those goals but to future-proof your business finances. Having a plan in place that can help you in times of financial difficulties will help your business to remain stable. 

With late payments, there are two main risks that can affect your business: the risk of not being paid at all and the risk of not receiving your payment on time. Late payments can affect a number of different parts of your business – from directly affecting cash flow to causing stress and resentment in staff members. The longer you wait for a late payment, the more difficult it can be to chase the late payment and recover your money. 

The importance of future-proofing your business finances 

It is important to future-proof your business for many reasons. Ensuring you are able to weather any financial storm is one of them. The first step toward future-proofing your business finances is to develop a strategy that can help you manage your money well and efficiently. One method to future-proof your company against the risk of late payments is to establish a plan for financial difficulties. This might entail creating a cash flow forecast so that you may anticipate which months are going on less income (i.e., leaner). 

Creating a budget – A detailed and realistic budget will help you to keep track of where your money is going and when bills are due so that you know what you have available to spend and what you need to save for. 

Managing your finances – Use online tools such as accounting software or other methods of tracking your expenses, income, and cash flow so that you can always see where you are at with your money. Having a clear picture of your company’s financial situation will help you make decisions about how to best manage your money. 

Communicating with your suppliers and customers – It is important to have open and transparent communication with others when it comes to finances. This can help to resolve any issues that may arise quickly before they become long-term problems. 

By implementing these strategies, you can ensure that you are able to weather the risk of late payments, while also ensuring that your business is financially secure. By future-proofing your finances in this way, you are investing in the long-term success of your business and helping to ensure its stability now and into the future.

How to chase late payments effectively

Chasing late payments can be a difficult and stressful process, especially if you do not know how to go about it. When chasing late payments, there are a few key steps that you should follow in order to ensure that your efforts are as effective as possible. These include:

1. Understanding the terms of your agreement with the debtor. When it comes to late payments, the first step is often to understand what the terms of your agreement actually are. This includes closely examining any contracts or invoices that you have for payment and ensuring that you can find the relevant information about when and how payments are due.
2. Knowing your rights as a creditor. You may need to rely on your legal rights as a creditor to get the payment you are owed. For example, there may be laws that allow you to charge interest and fees for late payments or take other measures to recover what is owed. Familiarising yourself with these laws can help you when trying to collect on the debt.
3. Communicating directly with the debtor. Whether you are communicating via email, phone, or in person, it is important to be clear and direct about your expectations with the debtor. This includes requesting that they make payment as soon as possible. You may also want to consider sending a formal letter outlining how much time they have left to make the payment and what will happen if they do not make it in time.
4. Keeping detailed records of all communications and actions that are taken. To ensure that you are able to successfully recover the payment, it is important to keep track of all interactions with the debtor and any steps you take to try and resolve the issue. This may include email correspondence or paper records that you can refer to if further action is needed.

By following these steps, you can better manage your finances and take the necessary steps to ensure that late payments do not create an obstacle for your business. In addition to these strategies, you may also want to consider speaking with My Debt Recovery about how best to pursue your debtors.