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How to deal with late or unpaid payments?

How to deal with late or unpaid payments?

We all know that chasing a customer for a late payment is not a pleasant task, either for us or for them. Unfortunately, this is a common situation that any business will inevitably have to go through, if only once. Whether it is because of a delivery error, an erroneous invoice or even because of a computer bug blocking the invoice, the fact is that late payments are not necessarily a sign of bad faith on the part of the customer.

This is why it is necessary to know how to manage the situation by showing delicacy while knowing how to be firm when necessary. After all, no matter the cause, late payments bring a long list of consequences with them. In this article, you will therefore be able to find the right reflexes to have in order to solve this unforeseen situation in the most effective way possible.

Where should you start?

The first reflex to avoid being faced with a late payment or an unpaid bill is to anticipate the situation.

For this you have several options, the first being to detail as much as possible the conditions of the agreement between you and your client on the quote or contract. The problem is that some customers may claim not to have read these conditions, and proving the contrary is not obvious if you do not have the necessary proof.

To prevent this from happening and that the document can be used as proof in the event of late payment, care must be taken to integrate these conditions in a legible manner (in other words avoid writing them in a reference in very small characters). You can also add a checkbox such as "By checking this box, I confirm that I have read and approved the general conditions of sale", all accompanied by the customer's signature.

For even more security, you can include these conditions on the order form. Since it is absurd to include them all, the most practical thing is to select a few that could be interesting to add to this document, in particular the payment due date or the late payment interest that will be due, in addition to the compensation of €40 in the event of a B to B transaction.

Other options are available to you to guarantee payment and avoid this type of unforeseen event. The first consists in requesting a deposit, generally 30% of the total amount of the service, in order to have an additional guarantee, as well as proof of the agreement made. The second, simpler option is to use a payment solution platform such as Spayce, which truly guarantees payment.

I am facing a late payment, what do I do?

Despite the precautions taken beforehand, this may not be enough to prevent late payment. As a general rule, a late payment must not exceed 60 days after the date of issue.

The first thing to do is to try to resolve the situation amicably by encouraging the debtor to pay the amount due. Generally, this is done via a reminder letter whose objective is to remind the debtor that the payment has still not been made, hoping that this is enough.

If this does not solve the case, you must then send him a formal notice to pay. This step is crucial: not only does it serve as a warning to the debtor, but it will also serve as legal proof for the delay or non-payment if legal proceedings are ever initiated (in case the situation still does not improve ).

The due date has passed, what options do I have left?

From the 1st day following the due date, late payment penalties are automatically due. In other words, if despite the formalities put in place the customer still does not pay before the deadline, you can initiate legal proceedings against your debtor.

This decision is not to be taken lightly since it can seriously damage your professional relationship with this client, but when toughening the tone is not enough, the possible alternatives are minimal.

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