At some point in your business, you’ll have to embark on a mission of collecting overdue invoices. Collecting pending invoices is a pain point for firms. It forces the owners to dedicate a substantial portion of their resources towards this course. This deviates the management’s time and focus away from improving the core competencies of the organization.
It can be frustrating, too, especially when the debtors take you on a roller-coaster ride as you pursue the cash. Businesses need a stable cash flow for their growth and survival. So, you have to do whatever it takes to ensure the cash keeps flowing despite all these troubles.
Below are some tips that will ease the management of receivables so that your business remains afloat.
1. Confirm That You Followed the Due Procedure
Never assume that clients aren’t paying up because they don’t want to. Start by interrogating yourself/firm first. Did you follow the proper channels for asking for the payment? Did you send the invoice in the first place? And how about the payment terms? Were they clear enough?
You will be in a disadvantaged position if you start sending nasty messages demanding payment just because you jumped to conclusions. What could be more embarrassing and detrimental to the business reputation other than going ballistic on clients while you are the one at fault
2. Make Sure You Set Clear Terms
All of your contracts with the clients should have clear payment terms. Displaying the terms of payment and their due date in an eye-catching manner increases their visibility. Clients won’t have the leeway of using failure to see the terms as an excuse for not making payments on time.
Note that some clients will only work with you if you accept their terms unconditionally. This means that they will remit payment as per their policies, even if you have yours. Please read all of your clients’ contracts carefully before transacting with them. It will save you a lot as you won’t waste time following up on payments that the client will remit later.
3. Leverage on Friendly Reminders
Email reminders are very effective for credit control. There is a possibility that your client didn’t pay on time simply because they forgot, or maybe you got lost in their to-do list. The secret to working with email reminders efficiently is choosing the right content and tone. You won’t have a problem generating the best reactions if you get them right.
Below are some of the email templates you can use to deal with unpaid invoices.
You can charge your clients fees for late payments legally. Charging the fees is a convenient way to spur your clients into taking action. A late payment calculation will give you the correct fee to charge the clients.
Remember to maintain a professional tone in all cases. Send these reminders periodically until the client clears the balance.
Stay Clear of Unpaid Invoices as Your First Line of Defense
It’s better to ask for payment from your clients upfront. But this is not always possible since clients have different payment policies. Conduct extensive background research on your clients before you agree to receive future payment for your services.
Any prior complaints associated with a particular client should be a red flag. Give such transactions a wide berth, however lucrative they may seem.
Getting more money on the books means getting ahead — helping you avoid other cash flow hassles too. Crowdz is one of the best invoice platforms where you can do this. Contact us for more information on how to sell invoices and get paid faster.