How Late Payments Drag Your Business Down & What To Do About It

As a business owner, you’re probably all too familiar with the feeling of checking your bank account every day and wondering, “Where’s the money? When will it arrive?” While payment methods such as ACH and SWIFT can help streamline transactions between businesses and their local and international clients, many companies still need help getting paid on time.

Late payments can cause chronic cash flow problems, making it harder for a company to cover its operating expenses and putting the future of the business at risk. So, if you’re tired of chasing down payments, keep reading! In this article, we’ll explore four common reasons why businesses struggle to get paid on time and give you some tips on how to fix these issues and get paid promptly.

Reasons why your business is struggling to get paid on time

It’s essential to remember that if you’re already facing issues receiving payments locally, it only becomes significantly more challenging for international payments. This is because factors like transparency errors, currency exchange rates, different payment regulations and procedures, longer processing times, and additional fees charged by financial institutions can cause significant delays, leading to difficulties in getting paid on time and impacting the smooth running of your business. Here are some reasons why your domestic and international transfers may be delayed.

Inadequate invoice tracking system

It’s not enough to create invoices for your domestic and international payments and assume you’ll get paid on time. You also need a system to ensure they are paid. A disorganized system can cause invoices to slip through the cracks, leading to delayed payments. Develop a system to track the status of each invoice, and consider using a payment dashboard to automate reminders and notifications for past-due invoices. Doing so can reduce the risk of manual error and ensure all invoices are accounted for.

Lack of clear payment expectations

If your domestic or international invoices say “payment due upon receipt,” clients may not understand what is expected from them. They wouldn’t even feel a sense of urgency to pay promptly. Instead, consider adding a due date to your invoices. This creates a deadline, similar to the bills you pay, and helps motivate clients to pay you promptly.

Absence of consequences for late payments

Some clients may still pay late, even with a due date on the invoice. Without consequences, this behaviour can become a pattern. You can update your contracts and add fees or collections to curb late payments. By doing so, you can avoid getting paid late.

Limited payment method options

Today’s clients have diverse payment preferences. Offering multiple payment methods, such as ACH, SWIFT, SEPA transfers, PayPal, and credit cards, makes it easier for clients to pay you. Additionally, consider offering payment plans for clients who are experiencing financial difficulties. This flexibility can help maintain a positive relationship with clients and ensure you get paid on time.

Top 5 Tips to Ensure Your Business Gets Paid on Time

Communicate Your Policies to Customers

To ensure that customers understand the payment terms and conditions, always clearly state them in writing on contracts and invoices. Ensure to include information on late payment penalties and enforce these charges when necessary.

Ask for Deposits

When taking on large international or domestic orders, custom orders, or new customers with limited or questionable credit history, asking for a deposit is a smart way to protect your business. This shows that the customer is serious about their order and gives you some assurance that they will pay in full.

Offer Early Payment Discounts

Offering discounts to clients who pay early is an effective way to incentivize prompt payment. For example, consider offering a small discount, such as 2 per cent, when an invoice is paid within 10 days.

Refuse New Orders from Overdue Accounts

If a client is overdue on payments, it may be necessary to refuse new orders until they have caught up. You can also consider implementing a cash-on-delivery (COD) policy for chronically late payers.

Hold off on Sales Commissions and Bonuses Until Payment is Received

To encourage everyone in the company to prioritize collections, hold off on paying sales commissions or bonuses until payment has been received. This reinforces the importance of timely payments and can motivate employees to follow up on outstanding invoices.

Get paid quicker with Winvesta!

As a business owner, you understand the importance of maintaining sufficient funds to keep your business operating smoothly. However, what happens when your international clients pay you on time, but the money takes too long to reach your account, or the fees charged for the transfer are exorbitant?

It’s worth noting that other payment options, such as bank transfers, wire transfers, PayPal, and Razorpay, can take up to 2-7 business days to reflect in your account. In some cases, issues can cause delays, which could extend the waiting time to up to two weeks, particularly with international payments.

If you’re looking for a safer and more efficient payment option, Winvesta is worth considering. With Winvesta, you can enjoy faster and more cost-effective international payments.

With Winvesta, you can receive payments from your international clients quickly. We offer a virtual multi-currency account, which helps you save money on transaction costs. You’ll get your own US ACH, UK account number, Euro IBAN, and CAD receiving account. So, you can receive international payments from Europe, the US, Canada, the UK, and other countries without paying high fees.

With our virtual multi-currency account, you can receive over 34 currencies from 180 countries, helping reduce transaction costs for cross-border payments. Withdrawals to INR are available in as little as 1 day, with rates starting at just 0.99%.

Conclusion

Businesses need to get paid on time to succeed. Late payments can make it harder for a business to cover its operating expenses and put its future at risk. Fortunately, businesses can use the above-mentioned method and ensure they get paid on time. Businesses can also enjoy using Winvesta to receive international payments efficiently and cost-effectively.

Open your Winvesta account today!