Start SweetOne study by FreshBooks found that using polite terms and phrases in the initial invoice or email helps to ensure prompt invoice payment. After all, if you receive an email from someone requesting something of you that includes a “thank you for your business” and “please pay by ##/##/####,” aren’t you more likely to pay it immediately? Politeness helps to improve the way that a customer sees you and increases your chance of being paid on time.
Be Very SpecificYou want to be paid on time to avoid needing to send accounts to collections, which is why defining what “on time” means is so important. Vague phrases like “pay upon receipt” or “payment terms: net 30” leave customers uncertain as to when payment is actually due. Instead, be specific and use phrases like “please pay within 21 days” or “please have your payment postmarked within 30 days of the invoice date.” A time frame helps to focus the recipient and gives you a timeline for follow-up if you haven’t received payment. The gold standard is of course to actually specify the due date. Tell your clients the specific calendar date instead of forcing them to figure it out. Detail also matters when creating invoices and onboarding clients. Make your invoice system and payment options clear when you first take on a new client and with the delivery of each invoice. In some cases, confusion on the client end prevents on-time payment. You can prevent this confusion by answering all potential questions up front and sharing all in detail.
Offer an IncentiveInstead of tacking on interest to penalize those who pay late, why not consider adding an incentive for those who pay early or on time? Offer a discount to clients who pay within a certain time limit. For example, if they pay within 5 business days of the date on the invoice, offer a 5% discount.
Offer Multiple Payment MethodsTimes have changed, and requiring clients to pay via check can slow down the payment process. Instead, offer a full range of payment methods including PayPal, debit cards, credit cards, bank transfers or traditional checks. If you have the ability to do so, you should offer payment online through your website or a secure client portal. Offering as much flexibility as possible will ensure that you receive your payment in the fastest amount of time possible.
Adapt to the ClientIf you have certain clients who consistently struggle with late payment or non-payment, adapt what you do to meet what they do. Ask for payment up front before you give them their products or services. Or, require a deposit that is a percentage of the total cost before starting on the work. As your relationship goes on and the client adapts, you can always go back to the traditional model once they have earned it.
Promptly send reminders if a payment deadline is missedIf your client doesn’t pay on time, make sure to send a friendly reminder right away. Better yet, call or email a few days prior to the deadline reminding them of the payment due date. We are all inundated with so many tasks that some things like paying bills get forgotten. Your client may appreciate the reminder. The added benefit of making a call may be that you find out what the client’s financial situation is or at least strengthen your relationship.
Partner with Alacrity Collections for Excellent Collections ServicesIf you are having difficulties getting paid on time, our team is here to help. We usually recommend sending clients to collections once their unpaid invoices are 120-180 past the date of sale or service. Alacrity Collections is proud to be a leader in debt collections since 1982. We achieve great results that are over twice the national average and we work tirelessly to protect your brand and improve your net returns. To learn more about our services, please call us at 1-800-752-9663 or set up a phone appointment directly on our representative’s calendar via this link: www.calendly.com/hheemann.
Other Posts You May be Interested In:
- 5 Ways to Safeguard Your Customers’ Personal Information
- 20 Red Flags for Collection Problems
- The Qualities of an Excellent Accounts Receivable Employee
- 4 End of Year Financial Tasks for Your Business