Collecting outstanding payments can be a bit of a challenge. Some people hate it so much that they get stressed and it makes them sick.
You have to find a way to get paid though. Until you receive your payment, your invoice is just sitting on your ledger as a debt to you. You are out of pocket.
This is what one small business owner in the UK said about the stress caused by outstanding payments:
“…[my partner and I] were both hit with late payment issues just before Christmas and had to put two months’ rent on credit cards”
The stress was so severe, her partner has now given up his business and gone back to work in an office.
Making a sale is often a time for celebration, and rightly so, but a sale is REALLY only made when payment is received. That’s the time you can relax and have a bigger celebration. When YOUR money is back in YOUR bank account.
I understand the stress of having outstanding payments and running out of money. I was in a similar position one time when my biggest customer couldn’t pay. It was SO stressful, I had almost $100,000 in outstanding payments.
I didn’t want to be in that awful position ever again, so over time, I worked out a few strategies to make sure all our invoices got paid on time. And my strategies worked!
Surprisingly, all it needs is a few proven customer service strategies, an action-oriented attitude, and a little practice. Just a few simple admin changes can reduce outstanding payments. That makes life and business so much easier and enjoyable.
Here are some of the proven collection tips and strategies that I’ve used to collect outstanding invoices (and I’ve collected a lot!). They’ve all worked brilliantly for me and will work for you too.
Outstanding Payment Tips for Small Business and SMEs:
In a small business, collecting outstanding payments is often just one part of your job so you might think you don’t have the right skills. Following the customer service steps below will make it much easier for you. You’ll feel more confident and you’ll find it will reduce the number of outstanding payments you have to chase.
NOTE: When you start collecting your outstanding payments, just find out first if anyone else in the company has spoken to the customer recently, and if they have, what was it about? Forewarned is forearmed.
If no one has spoken to your customer, I suggest you tread gently initially. Your customer may not have paid their invoices because they have an outstanding query on the invoice or the goods or services.
Always make the first contact with a cool, calm, service-oriented, fact-finding approach.
The last thing you want to do is to go ahead and contact your customer with ‘all guns blazing’ and then find out that something is wrong with the shipment or invoice and your customer is waiting for you to sort things out!
Reminder: You Have Made the Sale only when Payment Is Received
Collecting outstanding payments is a crucial part of a business. Only when YOUR money is back in YOUR bank is the sale complete.
Here are 5 Proven Strategies for Chasing Outstanding Payments:
1. Customer Playing ‘Hard To Get?’
Call at a different time of day and call every day.
If your customer is hard to track down in the morning, you may catch them in the afternoon.
2. Can’t Get Past ‘The Gatekeeper’?
If you keep asking “can I speak to [customer name]” and he’s always “in a meeting” you could ask the ‘Gatekeeper’ (the receptionist for example) “Is [customer name] there today please?”.
That way, you can find out if he’s there but not taking your call.
- Ask the ‘Gatekeeper’ for help. Explain that you really need to speak to your customer and ask when they might be free.
- Call before and after working hours. Busy people often go to work early and/or stay late.
- If you think the customer or gatekeeper might be avoiding you because they recognize your voice, ask a colleague to call. They can pass the phone over to you as soon as your customer speaks.
3. Provide ‘AWESOME’ Service:
- Everyone loves good service and it’s SO rare. It’ll make you immediately popular and well thought of.
- The first thing to do, when collecting outstanding payments, is making sure that there is nothing wrong with the goods or service and the invoice is correct.
- Then ask if there’s a hold-up somewhere and ask if you can help resolve the problem or
- Ask when your invoices are scheduled for payment.
4. Ask “Is There A Problem?”
- Once you know that the goods, service, and invoice are all fine but there’s no scheduled payment date or the date is far into the future you can politely ask “Is there a problem?”
- Most people hate to think that there’s a problem in their company and will pay you just to prove that there isn’t a problem.
5. Use ‘Open’ Questions
- Use ‘who?’, ‘what?’, ‘when?’, ‘where?’ and ‘how?’ to find out what the problems are
- Who needs to check this invoice?
- I really need to speak to her. What time will she be back from lunch?
- When will your next payment run be?
- Where is your warehouse located? When will you be able to check that with the Manager?
- How will I know if those invoices are included in the payment run on Friday?
Open questions are really useful questions to use when collecting unpaid invoices.
If you remember to pause after asking them, your customer will fill the ‘uncomfortable’ space and give you the answer you want.
Keep asking questions until you find out exactly what’s happening with your payments. [/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=”jJg8M6AZMxM” width=”800″ height=”450″ autoplay=”no” api_params=”&rel=0″ class=””/][fusion_text]
Make Outstanding Payments a Thing of the Past
Here are some more easy strategies you can put in place in order to set yourself up for collections success.
The idea here is to use some strategies to encourage your customers to pay their invoices on time so that your invoice doesn’t become overdue and unpaid.
Set Yourself Up for Payment Success:
- Introduce yourself to new customers before you send out their first invoice.
- Confirm that the order was received exactly as requested.
- Confirm the address that the invoice is going to.
- Call customers from a customer service perspective before the payment due date. Make sure the invoice is correct and with the right person.
- Keep notes of conversations.
- Build a friendly, professional relationship with your customer.
- Once you have ‘trained’ your customers to pay you on time and you aren’t collecting outstanding payments, you can always use email then.
- Use email to confirm agreements and conversations
Businesses can’t survive without being paid. However, putting a few easy strategies in place to get your customers to pay on time will boost your cash flow and ease your stress levels. Follow the tips here and get paid by the due date, then you won’t end up collecting outstanding payments.
To your business success!
