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6 Tips to Get Overdue Clients to Pay Their Invoice

Overdue clients can have a huge impact on your cash flow and overall business health

Cashflow can make or break a business. Profits are important, but the most profitable venture isn’t worth very much if you can’t get your clients to pay. Most businesses run into this problem at some point, however, the way that you deal with these clients can directly influence how and when you actually get paid.

#1 Get your head in the game

Chasing debts can be a difficult and confronting task. That is why it is so important to spend some time thinking about how you plan to address the issue. If you are compassionate you run the risk of getting taken advantage of, if you are too rigid the debtor may become hostile and that will decrease your likelihood of ever recovering the funds or getting future business from them.

 

Ideally, you want to look at the problem as a negotiation, be stern but fair, most importantly resist the urge to get frustrated. When things get heated both parties tend to become combative, which coincidentally puts each party in a worse position than they were in at the beginning of the conversation.

 

#2 Automate your reminders

Many accounting software tools will let you automate the task of sending late payment reminders at designated intervals.

 

For some clients bringing an overdue invoice to their attention may be all they need to get things on track. Once you set it up, the automation takes over, and your first line of defence is active. It won’t fix all your collection issues, but it is a worthwhile safeguard and important step to put in place should you need to take further action.

 

#3 A personal touch

Many businesses struggle with this step: directly asking for payment.

 

It can be daunting to call up someone, particularly a long-standing client to ask for money. As a society generally speaking it’s frowned upon to ask people for money. We avoid doing so because it feels rude and uncomfortable. However, this shouldn’t be the case. You have entered into a working relationship, where compensation for services is expected, it is not rude to ask for compensation, particularly if services have already been rendered.

 

While asking for payment is uncomfortable, know that you are in the right to ask. Be polite, be friendly, but always ask. A quick call, email or unpaid invoice letter can solve many issues. Maybe your client has some cash flow issues, your invoice slipped through the cracks, or they have been caught in all the red tape that larger organisations require before funds are released.

 

Get in touch find out, and keep the process moving along. Maybe the cheque really is in the mail!

 

#4 Keep cool

This could be the most important point on the list. When it comes to negotiating, experts know that getting confrontational is a sure fire way to not get what you want. A win-win is ideal but this requires everyone to keep their emotions out of it.

 

If both parties can keep calm, the possibilities of getting a payment or partial payment on the spot increases. Be open to a client’s problems and try your best to create a solution that will work for both of you. The solution can be to set up a time for when the payment will be made or even setting up a payment plan. But as mentioned – don’t get mad, even if you can’t come to a solution.

 

#5 Is it worth it?

Maybe you have gotten to this point earlier, but this is the point where it is worth looking at the debt and what it is worth, and more importantly what it is costing you (don’t forget man hours) to recover it. Is the sum so small that you can just write it off? Is spending more time trying to collect worth the payout if payment is eventually secured? Depending on your situation, you may choose to discontinue here. If you have a lot of these types of debts they can definitely add up and that is usually the time when it makes the most sense to bring in outside help.

 

#6 Call in the professionals

When it comes to collecting there are two industries that can assist you, legal, and debt recovery specialists.

 

Lawyers can be expensive, particularly if you actually end up having to go to court.

 

Debt recovery agents are uniquely equipped to deal with the situation, and progressively do what is required to obtain debts rather than a slew of unnecessary tasks. Often they have years of experience helping clients in your industry. They free up your time to get back to your work, with the peace of mind that they are vigorously working to collect on your behalf.

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