While business operations can be complex, many of the foundations remain simple. A business provides services or goods to a client and expects to be paid an agreed amount. For the most part, this is what happens. However, that isn’t always the case.
Sometimes, a client may delay payment or refuse to pay at all. What are some of the most common reasons for this and what can businesses do to protect themselves?
Claims that no invoice was sent
One of the most common excuses for non-payment is when the client claims they never received an invoice. This is why it’s so important for businesses to keep thorough records. If you have copies of invoices on file, receipts of postage, etc, then this can help to avoid such claims. Another thing you can do is utilize digital invoicing. This will help keep an exact track of when invoices were sent, whether they were received and what the amounts were. Digital invoicing services can even be automated, so forgetting to send an invoice becomes impossible.
Unclear payment deadlines
Ideally, everyone would pay at the earliest opportunity. Nonetheless, this isn’t always what happens. During initial negotiations, it’s important to set out payment terms. Will any money be paid upfront or will clients have a set time to pay once the work is complete? Not applying a payment deadline potentially leaves your business open to not receiving payment at all.
Preventing non-payment issues
The most effective way to prevent non-payment issues is to have thorough contracts in place. These are legally binding documents that outline the precise rights and obligations of each party. A contract can also include methods of dispute resolution should a disagreement over payments arise.
To resolve a non-payment issue or draft watertight contracts, it will be highly beneficial to seek legal guidance.