Many entrepreneurs have a lot of business havoc and are still wondering whether extending the payment deadline for invoices is a good thing or not. Certainly, agreeing to long invoice payment terms is our bow to our customers. A large number of them will appreciate the fact that we have agreed to receive the payment at a later date and will be happy to return to us to make many other transactions. In such cases, the forgiving entrepreneur is able to win over a large group of clients with this treatment.
Unfortunately, it is just as often the case that despite the flexibility of the trader to wait for the transfer of the debt by the client, he still does not stick to the deadline. Seemingly endless waiting for financial matters to be settled has recently become one of the most common problems faced by companies. Even though the unfailing approach to paying invoices is undisputedly disgraceful, it has even become the norm to which it is customary to turn a blind eye. How to defend oneself against similar situations which may turn out to be very unfavourable for the company? And in such a case, is it still worthwhile to agree to extend the deadline for payment of the invoice at all?
It is sometimes worthwhile to agree to extend the deadline for payment of an invoice, however, one should invariably approach this subject with common sense. Waiting too long to receive payment for services rendered or goods purchased from a large number of contractors can be very unfavourable and risky. Being too gracious for contractors who do not treat financial issues with care, we can lead to the fact that we ourselves slowly start losing financial liquidity. Waiting for the receivables to be received, and constantly begging that the day has finally come, when we will get the desired transfers from customers, may even lead to insolvency.
When it comes to the payment date of an invoice, we should invariably bear in mind not only the benefit of the customer, but above all the good of our company. If we agree to its extension, having already had problems with receiving payment on time with a given contractor, and we wouldn't want to lose this customer, we should insure ourselves in some way. In such a case, it is worthwhile to think about charging interest if the client fails to pay on time. The solution with the information on the invoice about the necessary financial penalty usually has a very motivating effect on untimely contractors.