Getting paid on time is crucial to the cash flow of your business. Late payments are unfortunately a common issue in businesses of all sizes, and it can be complicated and time consuming to chase unpaid fees. You know that keeping on good terms with your clients is important, but also that unpaid bills need to be paid–after all, the service was provided and you have put a lot of time and effort into the finished result. You have done your part, so it can feel disrespectful when your customers have an account overdue.
You can’t simply bury your head in the sand and hope your client will pay eventually. Luckily, the conversations and methods you will need to employ in order to move from ‘past due’ to ‘fee paid’ needn’t be confrontational or have a negative effect on your business relationships. You simply need to know the skills to communicate in a way that is clear, courteous, and broken down into easy tasks. Here are some tips on collecting invoices on overdue accounts.
Be as clear as possible from the start. Before you even begin work for a client, you need to have your payment policies laid out for them in writing. This information will need to include how and when your client can pay you, and potential penalties or discounts you offer for late or early payment, and all deadlines. This clarity at the beginning of a job will cut down on late payments, as your customer will know right away when and how to pay.
Send reminders. Gentle reminders will go a long way in enforcing payment even before an account is overdue. A follow-up phone call or email is a quick, efficient way to prompt clients to pay on time. Remember to be kind and professional in all of your communication; accounts owing are never personal. Sometimes they have simply forgotten to pay, and really do need your friendly reminder. You don’t want to sound demanding or hostile when trying to preserve your relationships. A simple message stating that the account is past due and what the deadline was, as well as how your customer can pay you is all you need to say.
Give options. If you have spoken to your client about an outstanding invoice and found out that they have been struggling to pay it, you may want to consider some alternative payment arrangements. Give your customer an option to break the payment into instalments. This is much more likely to get you paid in full than if you continued to demand the amount in full. Just be certain that if you can offer this recourse to your customer that everything is detailed in writing.
Keep records to avoid disputes. Just as you want to have a record of alternative payment arrangements, you’ll need to keep everything in writing to avoid any possible disputes. From the initial order outlining the work that needs doing and the estimated time it will take, the cost of the labour, and each addendum which may be tacked onto an invoice if the work goes longer than expected, every detail must be documented. Be as clear as possible about due dates, payment options, and penalties for late fees. Don’t forget the seemingly simple things like making sure your client’s name, address, and contact information is correct!
Offer incentives. Consider early payment discounts. A small 1- or 2% discount on an invoice if it is paid by the deadline is a small price to pay to better ensure you are paid on time. Your client will feel the benefit, and so will your business. Your cash flow will improve and your client relationships will remain intact. A win-win!
Outsource the whole process. Collecting overdue invoices is costly for your business. It takes valuable time and money to chase late payments and constantly send reminders to your customers. Consider a program that will do the work for you. With just a few clicks and some customized information, you can use your own time for more important tasks and feel confident that the service is working to get you paid faster. With Invoice Tracker you can set invoice reminders and then forget them, keeping payments timely. Automated, customized emails are a breeze to set up, and will trigger reminders on the intervals you choose.
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