From freelancers to fencers, techies to electricians, if you issue invoices as part of your day-to-day business, you will have experienced the frustration of not having those invoices paid on time.
And the part that really blows? The cringing follow-up phone call where you try to coax payment out of the client while not damaging your relationship.
Surely there’s got to be a better way – and there is. Following best practice when chasing invoices will go a long way toward making this most tiresome part of the month a lot easier, as will automating what parts of the process you can.
So what’s the best way to get paid while avoiding the awkwardness? Read on!
Great expectations
A stitch in time, they say, saves nine. Well you can save yourself time – and some stress – too by setting expectations early.
Such advice may seem obvious to the point of redundancy, and it would be, if not for the fact that it’s so rarely followed. Perhaps it comes down to human nature – no-one wants to interrupt the heady moment you’re sealing a deal with such vulgar subject matter as prompt payment of invoices – but that’s exactly what you need to do. A ten second conversation now, or even better, getting it all in writing then and there, can save you from the much more awkward “where’s my money?” conversation further down the line.
Tend your own garden
Let’s state the obvious: You can’t send snippy payment reminders to customers for jobs you’ve forgotten to invoice for.
Making sure you’ve got your own invoicing and accounting processes in order is the next key step to making sure you get paid on time. Xero, Quickbooks and MYOB, as well as a host of plugins, have all the functionality you need to streamline the invoicing process.
Honestly, in this day and age, there’s little reason to forget to send an invoice. If you’re not taking care of this currently…take care of it.
So you haven’t been paid…
…and now you have to chase.
How long do you wait? That depends. Some folks wait until the invoice is two weeks overdue. Others wait a week. Others send a reminder a few days before the due date. The best rule of thumb here is to do what you think best, test and tweak. If you’re annoying your customers, pull back a bit. If you’re feeling pressure on your cashflow, check your own systems then shorten payment due-dates.
With plenty of warning many clients will be perfectly happy with that. Trial and error is the name of the game here.
Sending an email while still wasting your breath
So you’re manually chasing your overdue invoices over email – good luck. Motivating non-paying clients to pony up the dough via email can be a difficult task.
Both science and art, finding that delicate balance between carrot and stick, and the right degree of passive aggressiveness (without being outright aggressive) is no mean feat and may not be a skill you necessarily possess.
Still, a simple email can work in certain situations and the below template is as good as any.
Try something like this:
Hi Steve, Your payment for job 459 is now due for payment. Please settle this account at your earliest opportunity. Kind regards, You
If your first approach doesn’t produce results, take things up a notch with a gently-worded threat to add late fees. (Similarly, consider offering discounts for early payment). If that doesn’t work, try including the phrase “Debt collectors” and see if Steve reacts to that.
Bear in mind however that emailing invoice reminders only works if you actually do it. Manually sending email follow-ups requires you be looking over your shoulder somewhat, thinking about work you did last month, rather than focusing on securing work this month. Furthermore, by the time you’re sending your third reminder that invoice can be several weeks, if not months, overdue, and that’s no way to run a business.
If you are going to send your own email reminders, excellent organisation and absolute diligence on your part is a must.
Phoning it in
So you’ve sent several delicately-worded emails and you’re still not getting any action? Time to pick up the phone.
Regardless of how confident you are on the phone, prepare a script before you call and try to stick to it. After all, you have no idea how the customer is going to react to your intrusion on their working day. Sure, you’ve done the work and you deserve to be paid, but the world is wide and not everybody will look at the situation so philosophically.
Be polite, express your expectations, and try to keep things friendly. Nevertheless, the purpose of the call is to get paid then-and-there, or to get an assurance of the date when the bill will be paid. These are non-negotiables and the client will have to come away from the call understanding that.
Automatic for the people
So you’ve sent out emails manually and gotten a poor response. That’s typical. On it’s own, a self-penned email asking for payment has little weight behind it, which is why picking up the phone is so often necessary. It’s also whythird-party emails to debtors are so often effective – they offer you the opportunity to be polite and persistent, but to also leverage the fact that another party is involved in the communication and the knowledge (on everyone’s part) that things can and will be escalated if need be.
The surest way to make your processes more efficient (and to avoid those awkward conversations) is to use debtor automation software such as Debtor Daddy to create a consistent, repeatable process for invoice collection. Once it’s set up, Debtor Daddy will manage the chasing of unpaid invoices at the click of a button, saving you time, preserving those delicate customer relationships and removing the need for uncomfortable invoice-related client interactions completely.