At itsettled, we’re very aware that collecting invoices can be a tricky topic for business owners - in fact, many business owners try and ignore the matter of collecting overdue invoices entirely. However, collecting invoices and using an effective debt collection process is vital for the health of your business - otherwise you could get yourself in deep waters.
The one defence business owners often use is that they don’t want to ruin their relationships with their customers - and we get that. Business relationships can take years to build, and good customer relationships are important. You don’t want to ruin those years (or even decades) of hard work by hounding that customer for outstanding invoices. But, what if we told you it doesn’t have to be that way? What if, instead of asking politely for invoices over a few months and then snapping and forcefully demanding your money, you try a more considered approach?
We’ve curated our top tips for helping you collect those overdue invoices - whilst still maintaining the good relationships you have with your customers.
As with any relationship in life, good communication is the cornerstone for customer relationships. This means keeping in contact regularly, whether that’s through email or social media. It doesn’t have to be every week, but some form of regular communication like regular blog posts or regular newsletters work well. Even if you’re not doing work with a customer right now, regular communication lets them know that you’re still there and accomplishing great things with your business.
Following on from communication, make sure you check your customers have actually received the invoice you sent. Check the details on your invoice - if they’re not right, you definitely won’t get paid. Consider adding a confirmation of receipt step to your collections process - that way, each time you send an invoice, you can be sure that your customer has received the invoice. That way, they can’t use the “we didn’t get the invoice!” excuse.
Many business owners take the wrong approach when collecting overdue invoices. They’re super kind to begin with, even when an invoice is overdue, and after a couple of attempts where they use overly-kind and understanding language, they get fed up and send a rude and demanding email. This sudden switch has the complete opposite effect to what they intend - the customers are automatically riled. Instead, use a gently escalating approach. This way, the language steadily increases in tone, and your customer won’t be alarmed by a sudden change in tone, which could anger or annoy them.
Throughout the collections process, it’s vital that you know what you’re legally allowed to say and do. If you threaten your customer with a County Court Judgement before taking the necessary steps, your customer will be annoyed at best and stop their custom at worst. Make sure you know exactly what you can say and what communication you can send.
If you’re faced with late payments and are unsure about what you can do to get paid, why not try itsettled? We provide credit management software that has been developed over the past twelve years by our co-founder Glen Morgan, who has nearly three decades of experience in the credit control industry.
We’re so confident in our product that we offer a payment guarantee - if our process has been followed and payment has not been made, we guarantee that our sister company Credebt will step in to chase the debt for no charge.
We hope you enjoyed this itsettled article and hope you feel empowered to make the right financial decisions for your business with our itsettled explainers and guides. If you need help with invoice queries or late payment, we’re happy to help! If you have any questions, or would like to see us cover a new topic, simply email us at firstname.lastname@example.org.
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