It is one of the biggest challenges for small and mid-sized businesses to collect payments from slow-paying customers. In 2012, the Wall Street Journal reported that around 64% of small companies (out of 850 companies) had unpaid invoices for more than 60 days. Today, after almost eight years, the situation is still the same, even worse.
A lot of small businesses don’t realize, but unpaid invoices and late payment can negatively affect their operations, staff salaries, and more.
If you’re one of those businesses that keep sending invoices and doing work without pay, sooner or later, you will put your business into crisis mode.
In this post, we are going to make you familiar with a few steps following which you can make your payment collecting process less painful. However, before that, let’s have a quick look at why late payments are bad for your business.
It Makes Your Look Hopeless
If your clients are not paying you on time, your prospects might think that you’re doing something wrong, and your existing clients are not happy with your products or services.
It Can Negatively Impact Your Relationship with Clients
It is essential to understand that a healthy relationship between a company and its customers is more than just about money. They have mutual respect and warm feelings that take years to build up. When you frequently ask for money from your clients, it might degrade the relationship into a transaction.
It Might Cause Hatred
Taking invoice follow-up may irritate your clients. They might misinterpret it as a sign of disbelief. Let’s get to know about them.
It’s Waste of Time
Most small businesses don’t realize, but writing short emails and sending them off becomes a massive waste of time and productivity, especially if you need to do that for several clients. Moreover, it interrupts your regular work. Don’t forget that it may take 20 to 30 minutes to get back to that focus again.
Now that you know the disadvantages of chasing payments, let’s find out some ways to ease the pain of collecting payments from your customers. Fortunately, there are plenty of ways you can make the payment chasing process trouble-free.
Automate Follow-ups and Reminders
Two of the most significant advantages of automating invoice reminders and follow-ups is that it saves your time and productivity. Moreover, automation guarantees that reminders will be processed much faster without making any mistakes. There are numerous tools available in the market that you can use to send payment reminders and ensure smooth payment recovery. One popular one is Chargezoom.
You Don’t Receive Bad Feeling From Clients
Before you send automated invoice reminders to your clients, make it clear that the emails are generated and sent by a computer system. Thus any bad feelings resulting from reminders will be directed to the software, not to you.
It is advisable to use an email temple that is written from the third person point of you so that your reminder messages don’t sound personal. It will make your clients feel that the reminder emails they are receiving are computer-generated, and they shouldn’t feel wrong about them.
For instance: “Automatic reminder: Your invoice no. XXX from ABC company is past due.”
Create Friendly Reminders
It is not easy to misinterpret friendly one-line messages such as “Hey, this is a friendly reminder about your invoice!” However, if you feel that your customer is deliberately delaying payment or doing anything nasty, try another way to make an inquiry about your payment process. For example, you can write something like-
“It has been a while since we were last in touch.”
“Hey Emma, I know it is month-end and your inbox must be flooded with a large number of emails, so I am re-sending the invoice in case it got lost in the shuffle.”
Make Friendly Phone Call
It is one of the ideal ways to ensure that your clients have received your invoice reminder. Make a friendly phone call before and after sending a reminder. It will also prevent misunderstandings about the tone of an email.
Request Payment Up Front
If you want to prevent any invoice issues in the future, you must request payment upfront. Checkout if your payment system allows temporary authorizations on credit cards. Collect credit card and bank details of your clients in advance to charge the customer on a predetermined date without making any delay.
Set An Automatic Payment
Thanks to tools like Chargezoom that allow businesses to simplify their recurring billings and online payments. The good thing about Chargezoom is, you can integrate it with other popular accounting software like Freshbooks, Xero, QuickBooks, and more. This user-friendly tool helps you set up and manage your billing. Moreover, it enables you to customize your automated payment reminder. It means you can send a different reminder to different customers. So, if you’re in search of an easy way to collect payment from your customers, give this tool a try.