Under ideal circumstances, all your customers will pay all their bills on time, every time you send one out. You’d be able to plan your cash flow management effectively. And you’d have plenty of revenue coming in. Unfortunately, we don’t live in an ideal world. And sooner or later, a client will fail to pay. If one of your customers doesn’t pay their invoice on time, what can you do to resolve the situation?
How to Get a Client to Pay an Invoice
First, you should know there are a few strategies that can help you avoid non-payment proactively.
Issue Clear, Easy-to-Pay Invoices
Consider relying on a comprehensive invoice template to guide your invoicing process. The clearer your invoice is, and the easier it is to pay, the more likely your customers will be to pay on time. So, for starters, make sure the terms and due date on the invoice are prominent. And you’ll also want to suggest multiple payment methods. Make those methods as convenient as possible for your customers.
Run Background Checks
Not all businesses can be trusted to pay consistently. So run background checks (or credit checks, at a minimum) on the people you do business with. And you’ll be able to flag the companies most likely to have problems with payment. From there, you can choose not to do business with them, set stricter terms, or even mandate payments in advance.
Automate as Much as Possible
Automate your invoice system, and include some automatic reminders for customers trying to pay those invoices. The more streamlined and consistent this is, the better — and apps will almost always be more reliable than human issuers.
Steps to Take If a Customer Doesn’t Pay
So what happens if you take these proactive measures and a customer still hasn’t paid by the due date?
These are the steps you can take:
Issue a Friendly Email Reminder
Your first step should be a friendly, non-judgmental one. People sometimes honestly forget to pay their invoices, and this is their chance to make up for that mistake. Remind them their payment is due, and ask if there’s any reason holding them up from paying; if they’re dissatisfied with the services your company provided, or if they’re facing a serious financial limitation, this is your chance to learn about it. In most cases, you’ll get a “sorry about that” message, followed by a payment in a reasonable timeframe.
Make a Polite, but Firm Phone Call
If you’ve issued an email reminder or two, you’ll want to escalate to the next stage. Make a polite, but firm phone call to the person in charge of issuing payments. Explain that you’ve issued multiple reminders to pay the bill, and remind them how long ago the bill was initially due. Don’t be aggressive or accusatory, but do insist that the invoice be paid as soon as possible, and offer some options for payment over the phone. Hopefully, you’ll be able to clear things up at this stage.
Offer a Compromise
If you’re still struggling to get paid, you may consider offering a compromise. Try to find out what the holdup is, and offer a compromise that makes both parties happy. For example, if your customer is having financial issues, offer to split the invoice into multiple smaller chunks, so the payments are more affordable. If your customer is unhappy with the services rendered, offer them a discount or additional services to make up for it.
Consider Invoice Factoring
Invoice factoring is a way to sell your accounts receivable to another company for collection. It’s not a good first step if you’re dealing with non-payment, but it’s available if your company needs a cash injection and you’re not having much luck with client communication. Here, you’ll sell the invoice for approximately 70 to 90 percent of its full value, and you won’t have to worry about collecting payment firsthand.
Consult an Attorney
If you don’t want to use invoice factoring or consult a collection agency, but you still aren’t getting payments, consider consulting an attorney. If you’re owed multiple thousands of dollars or more, taking legal action may be your best bet. An attorney will be able to provide you with more details about how this process could work.
Even if some of your customers are inconsistent with paying on time, it’s rare that you’ll need to resort to more aggressive collection methods. Most of the time, a few friendly reminders or a reasonable compromise are all it takes to get a full or partial payment for services rendered. But be proactive with all your customers, and watch your incoming payments closely; the tighter your invoicing system is, the less you’ll have to worry.
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