Why do so many business owners shy away from making collection calls to ask for payment of invoices that are overdue?
It seems bizarre because overdue invoices and the consequent poor cash-flow can make life difficult and stressful for any business owner.
So what happens when it comes to asking for payment of your invoice? Let’s check the facts:
How Much of Your Money is Tied Up in Overdue Invoices?
Typically in the private sector, companies have up to 80% of their assets tied up in accounts receivable. This is money that could be used for:
- Improving/upgrading business processes
- Additional marketing and advertising
- Paying employees and supplier bills on time
- Research and funding new projects
- Paying the business owner an appropriate salary
Four out of every five dollars a business makes could be tied up in delayed payments by clients – all those overdue invoices!
Even though it’s inconvenient and stressful to have poor cash-flow, lots of business owners still feel uncomfortable about making collection calls. Why is it that some business owners find it hard to ask for payment of their invoice even though they have provided a service or goods.
Is it just because they don’t know what to say when making collection calls?
Why Do We Fear Making Collection Calls?
The psychology behind this is simple. Most business owners are afraid that by making collection calls to ask for their money, they may anger the customer and therefore lose them to their competition.
The truth is that once clients have received goods or services from you, they expect to pay. Asking for your money when you have fulfilled an order will not be viewed as offensive. It just needs to be done the right way.
The key to getting invoices paid by the due date is to follow this plan:
- Send out 100% correct invoices – 49% aren’t and don’t get paid
- Follow an easy but proven professional collections strategy
- Have a policy of making ‘Courtesy Calls’
- Use a tried and tested collection call script, guaranteed not to upset your customers
If you follow an easy collection strategy, proven not to upset your customers, it will get your invoices paid on time AND help you build a stronger relationship with your customer.
Strong business relationships encourage repeat business and referrals so not so much expensive advertising is needed to grow a business.
The 3 Most Common Reasons for Late Payments?
- There’s a query on the delivery or invoice
- The invoice is with the wrong person
- Companies are just waiting to be asked to pay
These three things are super-easy to fix. It just means getting the admin right.
Many businesses have a payment strategy of “as soon as we are asked, we’ll pay”. That’s okay. Making a call to ask for payment politely is an opportunity to improve your business relationship. Payment reminder letters just don’t offer the same opportunity as making a call.
Getting your customers to pay your invoices on time and encouraging repeat business is much easier than most people think.
Making collection calls can be perceived as scary because it’s something we rarely do. It’s just like anything that we haven’t been taught how to do. Making a call and getting positive results is quite easy once we know how.[/fusion_text][/fusion_builder_column][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][fusion_youtube id=”hghueqAFipY” width=”800″ height=”450″ autoplay=”no” api_params=”&rel=0″ class=””/][fusion_text]
The Brilliant ‘Courtesy Call’ Strategy
One of the very best collections tips is to make a courtesy call after every invoice is sent.
Make it part of your collections strategy to ask how satisfied your customer is with the goods or services provided.
When you are sure they are satisfied, ask if they received your invoice. Many clients will appreciate this call and even make payments right there and then, assuming everything is in order.
It’s OK to Ask for Your Payment
Once the order is completed as requested, and you have made a courtesy call to your clients, it’s quite OK to ask for your invoice to be paid.
When the client confirms that they are happy with their purchase, it is good business for them to pay the bill. When they are happy with your service they want to keep you as a supplier as well.
Don’t let fear keep your money tied up in accounts receivables. Follow a few expert collections call strategies:
- Confirm your invoices are 100% correct
- Ensure the invoice is with the person who can authorize and pay
- Ask if your service fulfilled your customer’s order
- Make a ‘Courtesy Call’.
Just put these easy collections tips and strategies in place and the fear of making collection calls will disappear. You’ll be able to wave goodbye to overdue accounts and payment reminder letters forever.
To your business success!