When you make a sale on store credit, there is never a guarantee that the customer will pay you on time. In fact, one in three Americans is late paying their debts. Instead of banking on timely customer payments, plan for the worst. And, consider charging tardy customers a late payment fee to reclaim your losses.
If customer payments are late, you might not have enough money to pay yourself. According to one survey, 79% of small business owners cut their pay when customers don’t pay.
Sometimes when a customer won’t pay, you don’t have enough money to cover your debts, which could result in late payment charges for your business. Implementing a late payment policy can help you crawl out of the cycle by discouraging late payments and giving you an additional cash flow cushion.