There’s nothing more frustrating than waiting on outstanding invoices to be paid. Even more, is the discomfort when we have to remind clients to pay up. Outstanding invoices can sabotage the smooth running of a business due to an interrupted cash flow.
Big and small businesses experience the pressure associated with waiting on payments from clients. In some situations, a gentle reminder to make payments can return to ‘bite us in the butt’, especially with difficult clients. That’s why the big deal isn’t about talking to clients to pay outstanding invoices. It’s more about being persuasive to win your client’s willful cooperation without coming off like ‘the hulk’.
Here are five interesting ways to get clients to pay outstanding invoices:
The goal is to avoid outstanding invoices in the first place. We recall those weird moments when it feels right to make legitimate demands and claims only to realize that we got it wrong. There’s nothing more embarrassing than sending payment reminders only to realize that you were at fault the whole time.
By being proactive, we mean going back to the drawing board. Check with your employees and office assistants to ensure that you followed all requisite steps to getting paid.
You need to ask yourself some questions concerning the payment due process and answer them before reaching out to the client. This helps you to stay ahead of outstanding invoices by doing a thorough self-examination to avoid those embarrassing moments that could mar your business reputation. A few of such questions include:
- Did I actually send the invoice?
- Were the terms of payment clearly stated?
- What’s the actual amount due?
- Was the right invoice sent to the appropriate client?
- How convenient is my payment process?
- Is my own address accurate?
- Have I corresponded to check in on my client?
If you take the time to ask and answer these questions, you might realize that you’re the reason behind the outstanding invoice. This will enable you to get paid without resorting to situations that make you appear to be badgering your client. Being proactive means you take precautions to ensure your quick payment and avoid the stress of dealing with outstanding invoices in the first place.
Create a customized and systematic collection approach.
Your collection strategy’s purpose is to reduce payments after the due date. It also entails creating efficient processes to eliminate the need for manual activities and time-consuming manual payment reminders.
To begin, you must automate your redundant operations in order to focus on the most critical aspects of your job: automating first email reminders, for example, will allow you to focus on riskier accounts.
Then, based on the type of account, how much they owe you, and how late they are, you should devise alternative collection techniques.
You should not make the identical payment requests to “bad payers” (clients who frequently pay late) as you would to your main accounts. In the first situation, send a reminder before the invoice is due. For larger accounts, make sure to customize your reminders and begin with a polite call, for example.
Whatever way you split your clients, make sure that everyone receives a consolidated view of all their bills to eliminate confusion about what’s owing and when.
Instead of sending multiple reminders for each outstanding invoice, send one reminder that totals the money outstanding. This manner, your clients aren’t inundated with reminders regarding payment deadlines.
Use positive and negative feedback simultaneously
Your clients are not robots, therefore there’s no ‘on/off switch to getting quick payments from them. As an entrepreneur, understanding human nature and inclinations is key to doing good business. No two clients will have the same response to payments, which means you must be fluid and flexible in your billing system.
- By positive feedback, we mean creating incentives for early payments. A good example can be, offering a certain discount for the proverbial ‘early birds’. That is to say that clients who make payment within a specified period, perhaps 14 days, get a certain percentage of the actual price.
- By negative feedback, we mean creating penalties for late payments. A good example will be putting a certain percentage increment on the actual price for clients who make payments after the discounted period of, perhaps 14 days.
The key to this strategy is based on the fact that people are motivated by different factors; some positive, others negative. By operating both systems, you get paid on time either way.
What is the distinction between outstanding invoices and past-due invoices?
When expressing the payment status of an invoice, the phrases outstanding and late are sometimes used interchangeably. However, the two words are not synonyms, and the distinction is more than merely semantic.
- When an invoice is outstanding, it signifies that your client has not paid for a service but has yet to meet the payment date.
- When an invoice is past late, it indicates that your client has not followed his payment terms and has not paid for a service. The deadline for doing so has passed. This is often referred to as a past due invoice.
At first glance, an unpaid invoice does not appear to be a concern. After all, your client could still pay before the invoice due date, and chasing an overdue invoice costs you both time and money.
However, if your bills cross the 90-day mark, they are 60% less likely to be paid. Thus, rather than waiting for late invoices, you are more likely to obtain your money if you develop a payment strategy targeting clients while there are still outstanding invoices.
Why should you be concerned about unpaid invoices?
- Cash is the lifeblood of business owners, particularly small business owners: Most businesses base their success on net credit sales. But what’s the point if the money doesn’t come? Regardless of your most recent funding or the amount of money in your bank account, payment cycle is critical and should be a top priority if you want to develop a healthy and scaling firm.
- Accounts Receivables are costly; collecting payment entails more than simply requesting that “bad payers” pay their invoices. Late payments can indicate an underlying customer conflict, a pricing disagreement, a poor market fit, or bad debt. If detected too late, these might have disastrous consequences for your organization.
Incorporate a multiplicity of payment options
Never underestimate the power of choice. People love convenience, and what better way to utilize this to your advantage than giving them several payment options to choose from? Technology and e-commerce have created automated payment methods which are faster and more efficient. If you want to enjoy prompt payments and avoid the scourge of outstanding invoices, then incorporate other payment options like electronic payments, credit cards, etc.
Actively invest in client relationship
Forging a cordial client relationship that is based on trust, mutual respect and benefit is an invaluable asset. It’s necessary to handle all business dealings with a win-win mentality. The reason is that clients are less likely to fall behind on their payments when the deal encourages their benefits.
Send a friendly reminder
This becomes the last arrow in your quiver and is a direct spin-off from building a cordial client relationship. It’s always easier to send a reminder to a friendly client without having it explode in your face than to a client with whom you have no cordial relationship. Likewise, you stand a greater chance of getting a quick response to your friendly reminder.
Get paid now with Paystubsnow
It’s always safer to engage the services of an invoicing company like Paystubsnow to curate for you. Paystubsnow helps business owners avoid outstanding invoices from the outset by generating proper invoice systems, facilitating faster/accurate payments as well as maintaining excellent correspondence. By this, you’ll never have to worry about outstanding invoices and how to get clients to pay them.
Business survival and growth are all about strategy. There are rare cases where certain outstanding invoices/overdue payments may not be worth the time and effort. Other Paystubsnow services include helping you generate your 1099, and creating employee paystubs.
FAQS: How to ask for payment professionally?
This can be achieved via a polite email. The email should be clear, polite, and straight to the point. Remember to keep it friendly by asking if the earlier invoice was received and stating the due date of the initial invoice.
What to do when a client doesn’t pay?
If a client is refusing to pay after exhausting several attempts to collect payment. Then you should solicit outside resources like; collection services, factoring services or hiring an attorney. You should be sure that such payment is worth these extreme efforts since they’re going to cost you some money. Otherwise, it’s best to know when to walk away.
Can I refuse to pay an invoice?
Refusing to pay an invoice after the business owner has invoiced you is an outright invitation to war. This means that you’re placing yourself at the disposal of the entrepreneur to take legal action against you.