One of the most common difficulties for growing businesses is cash flow and this can often be thanks to late-paying clients. I know this is a huge headache for many business owners and entrepreneurs and it can be really limiting to your business, so here are some tips for effectively chasing up those late payments.
1. Set clear schedules
In order for clients to be able to pay you, it’s vitally important that everyone – you and them – are aware of the deadlines. Make sure you have payment terms in place and that these are clearly stated in your invoice. When sending your invoice, highlight the payment terms in the body of your email, too.
When it comes to deciding when to take what type of action, make sure you have a clear schedule, too. This will help you and any employees know when things need to be followed up and at what point you’re going to escalate your actions.
2. Be friendly but strict
If someone’s a day late with their payment for the first time, you don’t want to bite their head off – we all make honest mistakes and often a friendly reminder is all it takes to get your payment through. At the same time, you want clients to take you and your deadline seriously. For my clients, I set a reminder for myself a day or two before the invoice is due. If I haven’t received a payment by then, I send an email saying something along the lines of: “This is a friendly reminder that your invoice to {company name} is due in {X number of} days. If you have any questions, please let me know.” If someone has been intending to pay, this helps chivvy them along. It also has the additional benefit of ensuring they’ve received the invoice and the offer to answer any questions encourages them to get in touch if they need to.
3. Be regular
Keep track of exactly when your invoices are due and make sure you follow up regularly according to your schedule. If your chase-ups are haphazard and irregular, not only will you be waiting forever for payment, the client won’t believe you when you set them deadlines.
4. Don’t be afraid of the phone
It’s amazing how many people are scared of talking to people over the phone! I am, and there’s a good chance you are, too! But this can be an amazing tool for following up on overdue invoices. If you’ve emailed a few times with no result, give your client a ring and find out what’s happening. People find it much more difficult to be evasive over the phone than they do over email. You can find out what the status of the invoice is, when you can expect it to be paid, talk to another member of the team if necessary, and remind your client that you’re a human being with invoices to pay yourself.
5. Don’t be a pushover
It’s YOUR money, you have worked hard for it, you deserve it in a timely manner. Don’t let anyone fob you off with excuses or make you feel that you’re not worthy of that money. Go get them!
6. Know what you’re talking about
Make sure you have all the details: invoice number, date sent, date due, date of follow-up emails/phone calls, service/product supplied, name and contact details of your contact, relevant email chains… And make sure you have all your facts straight, too. It can weaken your position if you send false or inaccurate information. By having all the information you need at hand, you can go in confidently and strongly.
7. Follow up
If someone hasn’t paid, follow them up. And don’t do it weeks after the invoice due date because you’re scared, or you don’t have time, or you forgot. If you’re on the ball, the message that you’re sending to your client is that you can’t be messed around and that you expect payment at the agreed time. Then keep following up. If you have a difficult client, they’re not going to pay up just because you sent them one email three weeks after the due date. Send regular emails and let them know that you haven’t forgotten about them.
Similarly, if you tell someone that you’ll be following up on a specific date, do so. Let them know that you’re a person of your word and that they can’t get away with not paying an invoice simply by trying to ignore you!
8. Keep track
Make sure you know which actions you have taken and when. Keep all your emails saved somewhere (all in one place!) and log your phone calls. You can either keep details of phone calls on something like a spreadsheet or follow up with an email to the client, detailing the call, immediately after hanging up. Include information such as date, time, who you spoke to (or if no one picked up), any discussions you had, and any dates you agreed on (when you will follow up again, when they agreed to pay you).
By knowing what you did and when, you have a stronger case to make if you need to take legal action (see point 9).
9. Take legal action
This is for the most extreme cases, and hopefully it won’t to come to that, but legal action is a possibility via a small claims court. If you have tried numerous times to chase up a client via email and phone – or even in person – and they have still refused to pay, you can threaten (and take) legal action.
Read my guide on How to Take a Client to a Small Claims Court for Unpaid Invoices.
10. Drop the client
If you have a persistently late-paying client or one who has caused severe problems for you in this way, then you need to get rid of them. You may hate the idea of losing business, but think of the added time, effort, and stress that has been caused by chasing up late payments. Is it really worth your health and sanity to retain this client?
I hope you now feel confident about following up late payments. A lot of the time there is no bad intention and people will just be disorganised and really busy. Just remember that, whilst you can sympathise, you need to look out for your own business and make sure you are getting your due.
Have you had any particularly tricky, late-paying clients. How did you resolve it? Share your stories below or ask any questions!
If you need help chasing up clients for payment, or need support in your business in any other way, please get in touch for a no-obligation chat.
You might also enjoy:
