This is a real problem, even more destructive than not being hired or being fired. When a customer or client chooses not to use your service or buy your product, you’ve only lost the investment you made in soliciting their business, and potential revenues. When a customer or client chooses not to pay you for work you’ve already done or a product you’ve already provided, the funds are coming right out of your pocket.
In order to solve this problem you need to become an expert on your customer’s business as well as your own. That’s because the problem might not be caused by you at all. The customer’s business may be undercapitalized. Or the client may just be taking advantage of your good nature and relaxed terms. Perhaps he’s decided not to pay for a while to “see what happens.”
In order to solve this problem without losing the client or customer, you need to walk a very careful path. If you’re too aggressive and demonstrate that you’ve lost trust in the other party, you’ll not only lose future business from them, but you’ll probably also have a hard time collecting what you’re already owed. If you don’t bring the issue up at all, it won’t get solved.
The secret here is to try to frame the issue as if it’s really about you. Ask if there is something you’re doing to make it difficult for them to pay on time. Perhaps you can change the date they’re usually billed, or perhaps you should bill them twice a month rather than just once.
Clients or customers who have simply been taking advantage of you will often latch onto one of your suggestions as a way to save face. Having been called on their bad behavior, however nicely, they’ll now toe the line.
Clients who have been having problems of their own will generally be prodded into a confession by your concerns. If a client tells you the reason she’s paying slowly is that her own business is having problems, offer to help. Suggest she speak with your accountant. Offer the name of your banker. Most times, by bringing the issue up and offering to help you’ll at least move your bill to the top of the pile.
If neither of these techniques works you’ll simply have to inform the client or customer that you’ll be charging them interest on their outstanding bills. And even if it means losing a customer, at some point you’ll need to stop doing business with someone who hasn’t paid. If you aren’t able to turn their not paying around, then they’re not worth keeping as a customer.