Why Don’t Customers Pay When you Give Them Credit?

by | Jan 5, 2017

These days the economy is making it more difficult to run a business and money is getting tighter.  Many small businesses are struggling because they give credit to customers who do not pay their accounts.

The reasons can be: 

♦  Customers can forget to pay because they are disorganised.

♦  Customers are not controlling their cash flow.  They either spend too much or don’t collect their outstanding accounts and cannot afford to pay their bills.

♦  Some customers hope you will forget that you invoiced them and you will not ask for payment.

♦  There are business owners who feel too embarrassed to ask for the money.  Then the sale ends up being written off because the customer has left town or the debt is too old.

♦  There are customers who do not intend to pay in the first place. They assume that if the debt is small, it will be too costly to take legal action.  Therefore, you will just write it off eventually.

♦  There are small business owners who give credit to customers by default. The customer has not asked for credit.  The business owner just gives it to the customer, because the small business does not have a credit policy.  Plus they have no administration or office procedures.  Hence they may not even invoice the customer for a week, or a month or longer.  The longer you wait to take action on getting payment, the lesser your chances are of receiving any money.

Visit the Queensland Government Business website for advice on setting payment terms

QLD Government Business website – setting payment terms

Biz Skills courses can teach you how to deal with customers who don’t pay or avoid paying, plus identify the customer with cash flow problems and how to deal with them.

The list of courses will give access to individual courses to learn more information.  On each course page you will find a preview of the course and a free download with details of the course content.

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