If you’ve ever sent an invoice as an SME, the chances are you’ve been paid late. But while invoices going overdue is an inevitable part of business, that doesn’t mean there’s nothing you can do to encourage prompt payments from your clients.
Lower down the page we have laid out a basic template for a process you could adopt. But first, here are some tips you can start using today to help keep your invoices coming in paid on time and your cashflow healthy:
Top tips for getting invoices paid on time
Have a process
Save time and effort by setting out a standard process for invoicing, automating the steps wherever possible (see below for a basic outline you can use for this). Create communication templates to keep the process flowing quickly without anything falling through the cracks.
Keep it friendly
Before the invoice is due, your reminders for payment should be friendly in tone. You have no reason to assume they will pay late, so your message should be received as a gentle reminder for their convenience. The idea is to keep lines of communication open.
Once late, let them know you’re serious
If the payment deadline passes, you’ll need the tone of your reminders to be firmer. You don’t need to be unpleasant about it, but you do need to show you’re serious about being paid as soon as possible. Keep communications brief and direct.
Use other means of communication
If you haven’t had any success with email reminders, it’s time to pick up the phone. If you can’t reach them on the phone, send a letter. This way you know that there is no chance they have missed any reminders.
Know when to use a Debt Collection Agency
There comes a tipping point where an invoice is no longer viable for you to chase without specialist intervention. This could be a certain amount of time after the deadline, or it could be a lack of any communication from the debtor up to this point. In some cases, you can judge by repeated excuses that the debtor has no intention of ever paying. That’s when you need to call in a Debt Collection Agency like Direct Collection Bailiffs Ltd.
It’s important to note that calling in a Debt Collection Agency doesn’t mean burning bridges with your client, especially if you choose one that acts ethically and professionally. In fact, taking this step shows your debtor you are prepared to take reasonable measures to get paid and reduces the likelihood they will delay payment in future.
Bonus tip: Add debt collection to your Terms of Business
By including a clause in your terms of business for the cost of using third party debt collection in the event of late payment, any commission taken by a debt collection agency will be paid by your debtor. If you don’t have this clause in place already, we recommend doing it as soon as possible (and to always seek legal advice when amending your terms of business).
Every business has its own processes for chasing invoices, however, here is a basic outline any business can adapt as needed:
- Raise the invoice in good time before the payment deadline (at least a week or two in advance)
- Send a friendly reminder a few days before the payment deadline
- Final reminder on the due date, attaching the original invoice
Hopefully by this point the invoice will be paid. However, if this is not the case…
- Send the first overdue notice a few days after the due date. Keep the message friendly, but brief and direct.
- Follow this up in the following week with phone calls and/or letters, so there is no chance they have missed your efforts to resolve the issue.
- If the invoice is still no closer to being paid, it’s time to call in a Debt collection Agency to mediate the process. Unsure about the process of using a Debt Collection Agency? Click here to read our easy to follow guide.