When trying to gain traction in your business or personal finances, there are things that can get in your way. Sometimes there is a slow down in income. Other times it is an emergency or unexpected cost that slows things down. Whatever it may be, one of the things you want to avoid as much as possible is making late payments.
Late payments can be devastating and can wreck your financial confidence. It can also end up costing you more. Many companies issue late payment fees or bills and payments that are received late. These payments are set by the company and can compound monthly or even daily.
Another costly result of late payments could also be a lowered credit score. If you or your business have debt that needs to be repaid, missing a payment or making late payments can lower your credit score with the credit bureaus TranUnion, Equifax, and Experian. Your business credit score with Dun and Bradstreet could also be affected.
Lowered scores with any of these agencies could make it harder for you to obtain a loan for a mortgage or car. And, it could make it harder for your business to obtain financing in the future.
How Late Payments Affect Our Entire Economy
When people think about making late payments to banks, it is easy to think that it doesn’t make much difference to an institution that generates billions of dollars. But what about the impact late payments make on smaller companies?
Overall, when customers make late payments, it hurts the overall ecosystem of small and medium-sized enterprises. Quickbooks surveyed 2,000 SMEs and they found that 65% of businesses said that they spent 14 hours per week on average completing administrative tasks related to collecting payments.
Another damaging result of consumer late payments on smaller businesses is the reduction of cash flow. In the same Quickbooks study, 72% of businesses said that payment processing also impacted their ability to grow their business. Late invoices limit the money available to a business.
When there is not available cash flow for these businesses, more time must be spent pursuing the payment of outstanding invoices which means less time working on growth-related activities. The stagnation of the growth of these businesses usually means the slowdown in hiring or even the laying off of current staff.
To prevent late payments from crippling your financial future as well as the overall economy, here are some things you can do to make sure your payments are made on time.
1. Automate Everything You Can
One of the easiest ways to stop your payments from being late is to have them set up for automatic payments. You could have your repayments done via a direct debit that comes out on the same date each month without you having to do anything. This way you won’t forget to send the payment and stop any late fees from being charged to you.
If you don’t want to set up a direct debit, there are also third-party tools you can use that will help automate your payments. These tend to be common with digital-only banks that work via a smartphone app. These can be particularly helpful if you’re wanting to keep all your payments in one place.
2. Know Your Accounts
Set one day aside each month, or even week, to go over your accounts. Make sure you know exactly how much money you have coming in and how much needs to go out. This will stop you from not leaving enough money in your bank for your payments and ensure you know which bills you’ve paid.
If you have accounts at different financial institutions, you may want to have an app that will allow you to view all of your accounts in one location. This will give you a quick glance at what has been happening with your accounts and can help you see if funds have been debited to your account.
Here are a few of the apps that will allow you to monitor your finances all in one place:
Mint-This is one of the most popular financial apps available. Mint is a free budgeting app that syncs users’ bank accounts, credit cards, PayPal.com and other accounts. Mint is great because it helps track incoming and outgoing money.
Checkbook-This app is very similar to Mint as it tracks an unlimited amount of accounts and helps with tracking expenses for tax purposes. Checkbook works like a hand written checkbook ledger and has beautiful, easy to understand reports.
Goodbudget-This is an app that helps you keep a budget by monitoring your spending, savings, and debt.
Pocketguard-This app categorizes and organizes your expenses, monthly bills and subscriptions into clear, beautiful tabs and graphs,
If you don’t want to set your payments to be automatic, you might find it useful to have reminders each month. You could set them on your phone, write them on your calendar, just make sure they’re in a place where you’ll easily see them, so you don’t forget to pay.
Try to set your reminders for a time of day when you can stop what you’re doing and pay it there and then. Otherwise, you’ll swipe it away and think you’ll get round to it later and end up missing the payment again. Some companies, in particular banks, will send you reminders when a payment is due.
4. Change The Payment Date
If you’re consistently missing payments because they’re at the end of the month and this is when you’re most swamped with work and do lots of overtime, it might be best to change the payment date.
Try to have your payments come out roughly on the same day each month and when you’re able to spend the time paying them. Having them spread out over the course of the month can make it impossible to remember them all, so contact the companies and try to move them all onto the same date.
5. Follow up on all Payments
Missing a payment can seem scary the first time you accidentally do it but try not to fret. Make sure you contact the company the second you realize and pay it. It’s also good to ask if any fees have been added to your account because of this too. If you find it hard to stay on top of your payments, try implementing some of the useful tips above and you’ll soon find you never miss any!
We’ve all had to face financial emergencies at one time or another, and you might have turned to borrowing money from direct lenders to help get you through it. Even if you don’t have a great credit score, there are lenders that provide no credit check loans, so no matter your situation, you still might be eligible.
However, you might come across some issues when it comes to repaying. Not only can this cause problems with the lender, but it could also potentially hurt your credit score too. To help, here are some top solutions to stop any problems you have with late payments.