As a startup, it is essential that you get your payments on time. Whether you are into manufacturing or providing services, your revenue depends on the payments your clients make. If you don’t get paid in time you tend to make delayed payments.
These are warning signs as this will eventually lead to fines and other interests on the statutory amount that will pile up. Unless you make a proper plan to cover your statutory payments, it might eventually lead to the closure of your business. We have outlined a few warning signs that you need to pick up so that you are able to plan for any impending financial disaster that might arise out of delayed payments.
1. Dishonor fees and bounced cheques:
If the cheques that you receive from your clients get bounced, it is a noticeable symptom that your client might be suffering from financial difficulties. While a single bounced cheque might not be a cause for concern yet if their cheques repeatedly bounce – you should start making plans to mitigate any impending financial disaster.
You need to keep track of such instances and take it up with your client. If they still default on the payment you will have to assert that unless they pay up by a particular date – you will have no choice but to start charging them interest on the amount payable.
2. Your client not paying employees:
Have you heard any complaints from the employees of your client that they are not getting paid? Well, if you do, it’s time for you to buck up. Not paying employees or delayed payments is a sign of the deteriorating condition of a particular company.
You cannot take this lightly. If the employees are not getting paid, it is very much probable that your client is facing financial issues and your payment will inevitably be delayed.
3. Non-Payment/ delayed payment of taxes:
If you have any information that your client is defaulting in/ making delayed payments of taxes you should start preparing. Even if there is the slightest rumor, you need to start taking precautions. Your client might tell you that they don’t have funds but you have to run your operations right? When there is a delay in the payment of taxes, it is possible that they are delaying the payment of taxes because of the lack of funds. Non Payment of taxes is a sign that your client is facing financial trouble and your payment will probably be delayed.
As a startup, it is important that you send in your invoices early and also push your clients for your payments. While it is a good practice to be lenient at times, as your client might be suffering from cash flow problems you need to be vigilant so that it doesn’t become a regular situation.
If you have clients who keep defaulting on the deadline for payment – it will eventually affect your business. So, watch for the warning signs and put a system into place to make sure your clients clear their payments on time.