Significantly overdue invoices are a problem in many industries. There are several things you can do to increase the likeliness of getting paid promptly for the products you sell. Every one of these can have an impact on your organization’s cash flow. When you combine all of these steps, you increase your chances of getting paid considerably.
What to do before the saleThe information you gather before the sale will allow you to follow up if you don’t receive prompt payment. It will also ensure that others can take over on your behalf if your own efforts don’t succeed. First and foremost, it is essential that you obtain complete and accurate contact information from your client. The information you gather before the sale should — at a minimum — include, the full name, address and phone number (home or business) of the person who is responsible for paying you. Additional contact information, such as a cell phone number and place of employment are helpful as well.
A contractThe more expensive the product or service you sell, the more important it is to have legal protection. Having a contract also increases your chance of getting paid. This should include what products or services you will provide, payment terms and anything else you need to cover. If you currently use a contract and have had an issue with getting paid nevertheless, you may want to have a lawyer update your contract language.
Delivering exactly what was promised in a timely mannerIt is essential to keep up your part of the sale. This includes prompt delivery of exactly what you promised to the right location at right time. If you sold a “midnight blue” widget and a “royal blue” one arrives or the right color arrives a day late, your customer won’t be happy.
Prompt invoicingSend your invoice promptly if the customer doesn’t pay on the spot by credit card or check. Invoices should go out the same day or the same week, if possible.
Information to include in your invoiceEnsure that the invoice includes relevant details to the transaction, including but not limited to:
- Your complete contact information including phone number so the customer can contact you with questions
- Your mailing address (e.g. a post office box) if different from your office address
- Your customer’s complete contact information
- A description of goods and services provided including quantities and any other relevant information as applicable (SKU #, color, full description, batch number, color, ship date, taxes, …)
- List items separately with their individual descriptions and pricing if one invoice covers multiple line items
- Date when goods and services provided
- Due date and payment terms
- Invoice number
- Customer ID number if you use one
- Any instructions needed (e.g. where to send the payment, whom to make a check payable to, if payment via a website portal is an option, …)
- Put the word “Invoice” both on the invoice and the envelope. If you submit your invoice by email, put “Invoice” in the subject line. You can add a due date here as well.
Beyond the invoice
- Keep track of any email or text correspondence you have during and after the sales process. Yes, even text messages can be useful.
- Friendly phone call reminders help as well. The emphasis being on “friendly”. People are more inclined to pay their bills if they are treated with respect.
Still no payment?If you haven’t received payment after 30 days, promptly send out a second invoice that includes an email about the amount being overdue. Note that payment is “due upon receipt” and any late fees if you charge those. Keep in mind, that in many states you can only charge late fees, if they were listed in your original contract. Also add a note that prompt payment is expected, and that the account will be turned over to collections if payment isn’t received in a timely manner.
One more tryIf the second invoice also didn’t result in payment, give it one more try. Send a third invoice with all of the necessary details and outline consequences again (additional fees, account being turned over to a collections agency).
Time for the professionalsIf you have not received payment after 90 days, promptly turn over the account to a reputable collections agency. Collections agencies are experts in collecting money on significantly overdue accounts. The longer you wait with this step however, the smaller the chances of getting paid at all.
Wrapping it upIf you take all of these steps, the percentage of your invoices will be higher than if you skip a few of these steps. If you are looking for an agency, let’s have a conversation about your needs and how Alacrity Collections Corporation can assist you.
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Give us a call or send us an email now and we’d be happy to answer any additional questions you may have. 1-800-752-9663 or email@example.com. Alternatively, you can schedule a 30-minute call to review these points and your questions in more detail. Just follow the steps to directly book a phone appointment with one of our representatives via www.calendly.com/hheemann. We look forward to speaking with you!