Posted by Samantha Clooney
Did you know that small firms spend up to 130 hours each year chasing overdue invoices? That’s two working weeks.
Over and over again in the last few years, I’ve been hearing how frustrated my clients are with customers who are very slow to pay or who don’t pay at all.
Overdue invoices have a huge impact on the wellbeing of a small business and it can really sour our relationships with our clients. But it doesn’t have to be that way. I’m going to give you some top tips to help you persuade your clients to pay – the stress free way.
1. Don’t be Afraid to Ask
It’s your money. If you’ve done the job right, you’re entitled to be paid! There’s no stigma attached to chasing small monies, and getting tough is no longer seen as petty or weak. If anything, it shows your clients that you’re efficient and worth paying for.
2. Put a Process in Place
Even if you’re a one-person company, you must create clearly defined processes for dealing with late payments. Chasing money is time-consuming, but these processes will keep you sane – and profitable.
3. Contact the Client Immediately
Contact the client directly on the day payment becomes overdue. Try not to use email — a telephone call or face-to-face meeting is far more effective. During your conversation, check that they’re satisfied with your work. Establish whether they have a problem paying and agree a payment schedule. Often, the client may simply have been away or has forgotten and will pay you immediately.
4. Nudge the Client Harder
If you’re still not being paid, contact the person directly responsible for paying invoices. If payment is considerably delayed, write a formal letter stating a date when late fees and interest will start to accrue. Most countries have statutory interest rates for overdue payments. In Ireland it’s 7% per annum, 8% in the UK and US states vary between 6% and 10% per annum.
5. Accept the Inevitable
If negotiations break down, write a letter stating that the client is in breach of contract (verbal agreements are still legally-binding in most countries) and you have no choice but to withdraw your services. Don’t make empty threats; be prepared to start legal proceedings.
6. Never complain
Don’t discuss a non-paying client to others — especially on social networks. It’s not professional and is unlikely to result in a positive outcome. Never use aggressive language or start making threats. You may laugh, but last year, I spoke to someone who threatened to break a client’s legs!
If you can’t chase clients yourself, there’s always an alternative – outsourcing.
Please feel free to contact me at: email@example.com, to see how we can help you with your credit management. We’ll let your clients know that you mean business.