Getting Customers to Pay Their Bills on Time

The best way to get customers to pay on time is to communicate with them before the bill is due. This process starts at the time you initially grant them credit. Be very clear about the payment terms. Make sure that the customer understands what is expected of them. Be clear about the consequences of late payment. Remember that extending credit to a customer is a privilege and not a right. That customer should honor that privilege by paying at the agreed upon time.

Businesses that call and remind a customer a week or so before a bill is due, will have much more success in having that bill paid on time. That call is a lot easier than the one to the customer who has missed the payment deadline. If there is a credit concern, either regarding the credit limit or the timeliness of payments, the first call to the customer should come from the salesperson. They often do a much better job of handling the customer that someone from the credit department.

I once had a very large customer who was always late in paying his bills, not just to me but to everyone he did business with. So I finally made a deal with him. I agreed to send him a FedEx envelope – addressed and stamped – the day before the bill was due. He said he always smiled when he got that envelope because he knew I was serious about getting paid. From that point on, he always paid his bills to me on time.

-barney