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What do I do if a customer isn't paying?

None of us go into business thinking that our customers won't pay us. But sometimes we find ourselves in situations just like that. Sometimes they go quiet when we start chasing... and then we start to worry that they will never pay. Don't worry, there are a few things you can do to try to secure payment.

Firstly, fix it before it becomes a bigger problem...

A stitch in time saves nine. It's better to spend a little time now to deal with a problem than wait til later when it may get worse.

A lot of people worry about looking aggressive or unreasonable, but remember, you are entitled to be paid for what you have done. You are not there to prop up someone else's business and so long as your terms are fair and reasonable and you've fulfilled your side of the deal, you are within your rights to expect payment.

Here are six steps we recommend you take when someone pays you late :

1. Keep up communication with them. Keep it friendly but firm. Stand your ground if you are confident that you should be paid.

2. Have a clear policy for handling late payments which includes sending out reminders on overdue accounts.

3. Be prepared to pick up the phone if your emails are letters aren't getting a response. Sometimes people are just really busy and under pressure. There isn't always a sinister reason why your customer isn't paying.

4. Add late payment charges to business to business debts (see our other blog post) and keep a record of these charges.

5. Keep on top of late payers so they don't turn into debts that never get paid.

6. If all else fails send out a formal legal letter, called a letter before action pointing out that if payment isn't made you are within your rights to take formal legal action to recover the debt.

You don't just have to issue a court claim to recover your money...

You can also consider using a debt collection agency or opting for arbitration (arbitration is a procedure in which a dispute is submitted, by agreement of both parties, to one or more arbitrators who make a binding decision on the dispute).

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