At some point, companies have to deal with overdue invoices. Whether the term is 30 days or more, there are clients who, for one reason or another, fail to pay on time and this is one concern that should be dealt with on a regular basis.
As we all know, survival in any type of business rests on the cash flow and handling overdue invoices forms part of an important aspect of the operation. But chasing clients with overdue or unpaid accounts can take so much time and resources. In an article on “How to tackle overdue invoices and ensure you get paid”, Creative Boom listed some tips on how to stay friendly with clients and ensure smooth collection of overdue invoices:
1. Set expectations by establishing your payment terms as early as possible. You can start the deal by explaining to the client how and when you issue invoice, and when you expect the invoice to be settled. Usually, it’s a 30-day payment terms and this may vary depending on the size of the company and the volume of transactions.
2. Warn clients about interest on late payments. Some companies do impose interest on late payments so if you are one of them, be sure to inform your clients about the interest even before you provide the service.
3. Know when to follow-up with the client. When the 30-day time-frame is up and there is still no payment, give it a few more days before you start the follow-up process. You may have to decide how many days you need to give them after the invoice becomes overdue.
4. Send friendly reminders. Be it mail or a phone call, be sure to stay polite and respectful when reminding your client of the overdue invoice.
5. Don’t assume the worst when following-up with your client for the first time. Some people do forget, and getting angry at your client won’t serve you or your bottom line.
6. Sent a statement and continue to follow up for payment for up to 90 days.
When all these tips have failed, it may be time to hire someone else to do the collection. Turning the account over to a professional debt collector improve the chances of you getting paid for the work you have done.