Worried about having too many outstanding invoices? Outstanding invoices can be a great source of stress for a small business owner.
Steve Fimmano, a Partner at BDO says:
At the same time, it can be challenging to know the best way to ask for payment of your invoices. Lots of people are too worried to ask for payment in case they upset their customer. Consequently, with lots of invoices outstanding, business operators can get stressed about the lack of cash flow.
This can be a very worrying situation for any business owner but getting paid isn’t as difficult as people often think. All you need to do is follow some strategies proven to help get your invoices paid.
These are some of the simple strategies I used to get invoices paid in my business. They are all proven to work. They made sure our customers paid us on time, so we didn’t have lots of outstanding invoices to chase up.
If you follow these 4 easy ‘get paid’ principles, you can easily learn how to collect payment of an outstanding invoice before it becomes overdue.
When customers pay their invoices on time, you’ll find that:
- You’ll be more relaxed and confident (and probably your blood pressure will fall)
- Your customer will welcome and appreciate your great ‘customer service’
- You’ll start to build a strong relationship with your customer
- Your invoices will start to get paid by the due date!
Step #1 How to Avoid Outstanding Invoices: The Basics
Before starting any task around asking customers for payment, just note these 3 points:
- If people like you they are more likely to pay you
- The more people like you, the earlier they will pay you
- If people don’t like you or our attitude, they might hang on to their $$ longer!
So be pleasant, helpful and charming and work on getting your customer to like you.
Step #2 Be a Customer Service Champion
Before contacting your customer to ask for payment of outstanding invoices, make sure your company is 100% in the right.
Check to confirm that:
- The delivery of goods or service matched the customer’s order
- The invoice that’s outstanding is as originally agreed
- The invoice was addressed correctly
- Your customer hasn’t already reported a problem on the invoice
Step #3 Speak to the Decision Maker and Keep Control:
When you’ve confirmed that there are no queries on the account, contact the person who placed the order.
Note: A good way to get through to your contact is to ask “is [my contact] there today please?”
If you ask this question, you’ll find out if your customer is there. Even if the answer is that ‘they are too busy’ to take your call ask when they might be free and set yourself a reminder to call back.
Keep cool and keep control. Call back rather than leave a message – after all, your outstanding invoices are your money, and you’d like to have your money back in your bank account rather than your customers.
Although you have checked to see if there are any problems at your end, there still could be a reason why the customer hasn’t paid, so treat this as an investigative call.
Step #4 Be Confident When You Ask for Payment
When you’re sure that your delivery or service is complete and authorized, it’s definitely time to collect payment of your outstanding invoices
Put in a call to the person who pays the invoices. Use the tip above to find out if “they are there today”
Remember, whoever you speak to, always speak politely and persuasively. People are much more likely to pay you if they like you.
If your invoice is due for payment soon, or there are some overdue invoices, you can ask for payment to be included in the next payment run.
If the customers’ payment run is a while away (more than a week), ask for payment now so it reaches you by the due date. You can ask them to prepare a special payment in order for you to receive the payment of your outstanding invoices in line with your terms.
This 4-step process is one of the simple but effective collection techniques to get due or outstanding invoices paid on time.
This whole process helps build strong relationships with customers because it’s service based. When your business relationships are strong, you are more likely paid on time. invoices!
What steps will you take to avoid outstanding invoices?
To your business success!