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Guest Post: "A Primer on Collecting Late Payments"

From a friend who is an established consultant, who has both worked for major consultancies and run his own shop. He gives us these useful pointers today -

"A Primer on Collecting Late Payments"

Anyone who has ever done business has had occasional difficulties collecting payments from customers. Experience shows that putting some attention (in advance) on a couple of key items can help resolve the lion's share of these issues.

First general rule: Your written communication style and professionalism can go a long way toward inducing unwilling customers to pay up more quickly than otherwise.

Let me clarify these two terms:

Guest Post: “A Primer on Collecting Late Payments, Part 2"

“A Primer on Collecting Late Payments, Part 2"

The first general rule on collecting late payments was about overall professionalism and communication style. The second point naturally follows from the first one and is a critical elaboration of it.

Second general rule: Payout and delivery, both amounts and due dates are a critical part of the agreement. Make sure they are stated in writing in advance.

Be aware that it is bad practice to make any business agreement otherwise. In many cases it may be appropriate to add provisions to the agreement for late payment, which may even include late payment penalties or collection charges. It is a good idea to tie the price very specifically to the payout, payment terms and deadlines. For example:

* A payment of USD $1,000 will be made by the buyer on 5 March 2012. * This amount represents a 20% discount off the regular price of USD $1,250. * Discount prices are no longer valid for payments made later than 10 working days after the due date.

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