Dealing with past-due invoices can be one of the most challenging tasks for any business. It requires a combination of tact and persistence, as well as an understanding of best practices for asking for payment. In this guide, we’ll provide practical advice on how to ask for payment on past-due invoices and discuss the best strategies for collecting overdue payments.
Why Is It Important to Collect Overdue Invoices?
Collecting overdue invoices is a critical responsibility for any business. It’s important to act quickly, as late payments can cause cash flow problems and put your business at risk of insolvency. In fact, a study by the U.S. Bank found that 82% of businesses fail due to cash flow problems, which are most commonly caused by failing to collect on their invoices.
Worst of all, if your customers don’t pay their bills on time, they may not pay at all. Don’t miss out on income that you’re entitled to receive—follow our five steps to make sure you collect your past-due invoices.
5 Steps to Make Past-Due Invoices a Thing of the Past
Step 1: Establish a Payment Plan
The first step in collecting past-due invoices is to create a repayment plan with your customer. This will allow you to receive some compensation for the goods and services you provided while giving your customers the flexibility to pay off their balance gradually rather than all at once.
If possible, use a payment plan that allows customers to make payments in installments—this will help them stick to the repayment schedule without feeling overwhelmed. It’s important that you make sure both parties agree on the terms so there’s no room for ambiguity down the line.
Learn How to Craft the Right Payment Plan
Step 2: Know Your Audience
Asking for payment can be tricky, since it involves communication with customers who may have already been delinquent on their payments. The key is to remain professional and courteous throughout your conversations with customers while still making sure they understand it’s important they make timely payments. This means not just asking them politely but also providing information about why timely payments are important and carefully explaining the consequences if they don’t adhere to their obligations.
Make sure your customers know what will happen if they don’t meet deadlines or miss payments altogether—but keep things as positive as possible without being condescending.
Step 3: Follow Up Regularly & Document Everything
Communication is key in any successful collection effort. Good communication means being proactive in following up with customers about overdue payments. However, it’s essential that businesses keep track of each conversation via email or phone calls so there is no misunderstanding later down the line about what was discussed during those conversations—it can also provide proof in case legal action needs to be taken against a customer who does not meet their debt obligations.
Additionally, businesses should set reminders for themselves about when follow-up contact should occur (every few days or weeks depending on how far behind customers are). These reminders will help ensure nothing falls through the cracks and that collection efforts remain consistent until resolution occurs one way or another.
Step 4: Be Kind But Firm
When collecting money from past-due invoices, being firm but respectful goes a long way towards creating positive outcomes for both parties involved. This means approaching each situation from an understanding perspective instead of issuing threats or ultimatums. After all, most people understand that businesses need contributions from them in order to stay afloat. It helps if businesses can empathize with customers’ situations and make reasonable requests for payment plans (but remember—if too much flexibility is offered, then it could inadvertently lead to more delinquencies down the line!).
Always strive to come across as understanding yet determined during interactions with delinquent customers. This attitude demonstrates accountability while still allowing them some breathing room during difficult financial times!
This attitude extends toward digital communications too. Don’t be overly pushy or aggressive in your past-due invoice emails! This is one of the fastest ways to upset a customer and minimize your chances of receiving payment.
Step 5: Consider Professional Assistance
If your business finds itself unable to recover past-due invoices despite its best efforts, professional assistance may be necessary. Outsourcing collections activities gives companies access to expertise in dealing with difficult debtors. However, many companies struggle to choose the right professional commercial collections agency for their needs.
If you’ve had this problem, look no further than Rapid Collections! Our experienced staff specialize in getting results quickly with best practices developed over many years of experience! With our technology-driven techniques, such as skip tracing, persistent outreach efforts, and debtor education workshops, companies can put their worries aside knowing that professional guidance is available at every step of their collections journey!
An Executive Summary of Past-Due Invoices
Collecting on past-due invoices requires a combination of tact and persistence along with sound strategies tailored for individual circumstances. These strategies should include setting up clear repayment plans with customers/clients upfront, regular following up with all contact documented accordingly, and being understanding yet firm when communicating about overdue amounts owed.
Fortunately, professional commercial collections services like Rapid Collections are available should you need additional guidance at any point throughout the collection journey. Choosing committed partners such as Rapid Collections ensures optimal results, allowing you to focus all your attention back where it belongs—on running a successful business!