What can be more devastating than having zero clients? You guessed it: Having to collect unpaid invoices! It is like setting a sharp blade on your bare skin. It is a sensitive topic to start with. When the work is done and no paycheck is found, frustration sets in. How do you collect payment without your client getting on your nerves? Can you still maintain a good customer relationship after finally getting paid?

Collection Warfare: Learning the The Art of Getting Paid

You’ve done your part and still, you need to give your customers a little nudge. How do you collect your money with grace?

1. Be Prompt with Follow-up

When an invoice is overdue, the first thing you should do is call or send a note reminding the client about their expected payment. Depending on your success from a phone call, you should send your client the updated invoice with the new balance due including any applicable late penalties. Follow up from Monday to Wednesday. Doing it before the weekend will give more excuse to stall payments – for next week. Arguably, Friday is payday for many and could be a convenient time to catch your client with enough money to make a payment. Develop good relationships with your clients and you will figure out the best time to contact them.

2. Keep Your Cool

There are plenty of reasons why people pay late. Being polite goes a long way, even if you feel otherwise. Using the words ‘please’ and ‘thank you’ will help, as long as you stay firm in keeping your customers committed to your payment deadline date. Set aside your personal feelings when making a follow-up. Anger doesn’t accomplish anything.

3. Focus on the Solution

A big No-no in the call center industry is debating with irate clients. This applies regardless of how small your business. Listen to what they have to say first and take notes on their concerns. When they’re done, that’s the time you need to come up with a solution that will work best. If your customers request statements, email or fax it to them the same day. Just keep your focus on making it convenient to make payment as soon as possible.

4. Offer Options to Encourage Payment

You may consider giving discounts to those who pay “X” number days before the invoice is due. You may also offer flexible online payment options. It may sound harsh, but charging late fees instills discipline in the minds of your customers. BUT, in small business, you sometimes have to bend the rules and use your best judgment when deciding to apply late fees. In BIG business, late fees are applied regardless of the client history/situation. Small and micro business owners can and should know their customers in a more personal manner than big business. Therefore, each delinquency situation may call for different tactics. Remember that consistency is the key, no matter how creative you get with collection. E.g. If you charge a late fee to a customer one time and then let it slide the next (because their grandmother passed or they had sudden car repairs), chances are, they may coerce you into letting it slide more often in the future and become a regular slow-payer.

5. Get Your Guns Ready

It’s not about a shooting spree, but doing any of the following drastic measures: stopping services until you get paid, going to a small claims court, hiring a debt collection agency, or getting a lawyer to file charges. These are expensive measures to take.

Facing deadbeat customers is one of the toughest challenge when running a business. Your values will be placed on the hot seat. It’s always a tug-of-war between emotions and objectivity. Consider using an online invoicing system that has automatic due date reminders to help prevent invoices from going past due.

Tags: collect payment, credit dispute, deal unpaid invoice, debt collection, demand payment, invoice payment, past due invoices, payment collection, unpaid invoices

This entry was posted on Thursday, May 27th, 2010 at 9:55 am and is filed under All About Invoices. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.