to collect overdue invoices without affecting customer relationships
Imagine all your customers paying their invoices on-time. You would have a 100% accurate cash flow forecast all year, and you would be able to make important business decisions knowing that your bills would always get paid on time. However, many small-business owners have difficulty collecting unpaid invoices.
Customers who fail to pay overdue invoices can cause cash flow problems and unnecessary stress for your business. It can be difficult to keep up with your payroll, vehicle maintenance, and daily operating expenses. It can be difficult to find the resources necessary to pursue new opportunities and customers. You don’t want your hard-earned money to be tied up in receivables.
It can be difficult to chase customers for payment. It can be difficult to figure out how to ask for payment late without causing damage to the customer relationship. This is especially important if you want to continue receiving business from these customers. It is important to have a strategy that will ensure you get paid and minimize the risk of losing customers.
These are some of the ways that you can get payment from past due invoices and maintain good client relationships.
Send a friendly payment reminder
Sending a friendly reminder to pay late invoices is the first step in getting them paid. It is a good idea to immediately send a professional, polite email to remind your client of the due date. Notify your client that the invoice has been paid late, and also remind them about the various payment options you accept. In case the invoice is lost or damaged, it’s a good idea also to attach a duplicate of the original invoice. Sometimes the reason for nonpayment can be as simple as the client not being at work or the invoice falling through the cracks.
Talk directly with the payment source
If the friendly reminders fail, you can call the client or the payment source and speak to them directly. You might be able, depending on the situation to speak directly with the client and ask what is stopping you from receiving payment. You should also rule out that you are contacting the wrong person. You can contact the billing department if you have their information to get more details about your invoice and establish a realistic payment timeline.
Resign from Future Work
This is a good time to stop working with clients until payment is received. You should send your client a message informing them that you will cease all work with the client until they contact you and that payment has been made for any past invoices. Customers may find this an incentive to pay you promptly so that their order/project can proceed. Your business can also put future work on hold to avoid investing more resources, time and money in a job that might not pay.
Receiveables Outsourcing
It takes time away from your business to record, collect, and manage payments. Invoices that are more than 60 days late can lead to cash flow problems for many growing businesses. This situation is all too common and you should think about the benefits of outside assistance. Partnering with a factoring agency can give you immediate access to working capital as well as assistance with important back-office tasks such invoice review and collection. Not only will you get the assistance you need to speeden the payment process but also professional services that can strengthen your relationships with customers.
Optimize your Invoicing Process
It is important that you think beyond the collection of overdue invoices. What can you do to ensure timely payments? Take some time to review and improve your invoicing process. You should establish a policy that will guide you in how you handle customers. This includes defining payment expectations and what to do if they don’t pay. You should also have a consistent billing schedule and offer payment options. Late fees can be charged for unpaid invoices. Transparency and consistency from the beginning will save you confusion later on.
Invoice Factoring Services for Security Business Capital
Security Business Capital knows how costly late payments can be to a growing company. Our team has many years of experience providing flexible cash flow solutions to help businesses succeed. For example, our invoice factoring allows you to use unpaid invoices to get the cash you need quickly. Our back office support can help you reduce the time it takes to submit invoices and chase late payments. This will allow you to spend more time on new clients and exploring business opportunities.
Our experts can help you find the right balance between protecting your cash flow and maintaining long-lasting customer relationships. Oil and gas services, temp staffing, manufacturing/distribution, and transportation are just a few of the business types that use SBC’s invoice factoring services to generate cash on hand.
Contact us today to receive a complimentary quote and/or consultation about our invoice factoring services.
How To Collect Overdue Bills without Hurting Customer Relationships was originally published on Security Business Capital.
Author: Justin Young
Justin Young HoneyHat™
