Dos and don’ts when chasing overdue invoices
Once an invoice exceeds its credit terms, the pressure’s on as the likelihood of collecting the debt in full decreases as the debt grows older.
It’s therefore essential that you have a procedure in place to ensure your team is doing all it can to get paid as quickly as possible.
So, here are some dos and don’ts to follow when chasing overdue invoices to encourage your customers to pay and minimise the impact of the delay on your business.
Do contact your customer right away
As mentioned above it’s vital to act quickly in order to improve your chances of getting paid.
Therefore, you need to speak to the person responsible for paying your invoice immediately to ascertain why you haven’t been paid, and when they expect you to be.
Whilst it can be tempting to email your customer, a phone call will be more effective (and you can always follow up with an email confirming what was discussed or agreed).
You’re much more likely to make an impact over the phone than through letters or emails, whilst it is also easier to recognise when they are stretching the truth.
Always remember to log all correspondence, detailing who you spoke to and when, as well as what was said.
This should be done throughout the entire credit control process, but it’s particularly important once the invoice is due.
Don’t take their excuses at face value
When you contact your customer to chase for payment, always be sceptical of their excuses.
More often than not, such excuses merely act as delaying tactics.
It’s therefore essential that your business has a procedure in place to deal with each common excuse, thus restricting their delaying power.
For example, if the customer says they have posted a cheque you should ask for the cheque number and the postal date whilst checking that they have your correct company address. You could also ask them to pay over the phone to speed up the process.
Likewise, if the customer denies receiving the invoice you should email a copy immediately and then call to check they have received it. Don’t forget to remind them that payment is still due as per your terms and conditions.
Do act professionally
When it comes to credit control, you need to be firm but fair. It’s important to always be polite, understand the circumstances of your customer and explain your company’s procedure for the collection of outstanding debts.
Unfortunately, as a credit controller, there may be times when your customers lie to you, complain or get aggressive when trying to avoid making a payment.
But it is essential that you remain calm, composed and professional.
Not only is being aggressive towards a customer unnecessary, but it could also damage your relationships and your brand.
But don’t accept poor payment practices
Remaining professional does not mean you have to be passive.
Do not let customers force you into accepting poor payment practices.
You need to be strict with your payment terms and procedures to get the desired results.
For many businesses, despite the fact it is rightly yours, asking customers for money they owe you can be daunting.
This is particularly true when it is a large company or a valued customer whose relations you are afraid of damaging.
What you need to remember is that, by not paying on time, they have damaged your business’s cash flow and taken advantage of the trust you afforded them by offering credit terms.
Do consider all your options
There will inevitably come a point when you’ve tried all you can to recover the debt, making it important you make the most of all the resources at your disposal.
No two debts are the same, which means that your approach may not always be the same. You should assess each overdue payment separately and decide on the best course of action.
In the first instance, this may be mediation, adopting a polite but insistent approach that demonstrates how you value them as a customer, but also your intolerance for late payment and the importance of that money to your business.
You might also remind them of your right to charge interest on the debt under the Late Payment of Commercial Debts (Interest) Act 1998.
Beyond this, you may want to consider legal action or outsourcing the debt to a commercial debt collection agency.
Don’t forget help is available
You do not have to do all the hard work on your own. In fact, as invoices grow older it is often beneficial to bring in external expertise to help get the desired results.
Specialist commercial debt collection agencies excel at the recovery of particularly outstanding debts, dedicating the time and attention to each individual customer that you may no longer be able to afford.
This leaves you with more time and resource to focus on the rest of your sales ledger whilst increasing your chances of recovering payment.
A good debt collection company will use the right blend of understanding, sector knowledge and rigour to bring a successful conclusion to your debt collection requirements.
Often, their name alone will add further weight to your collections process, encouraging your customers to swiftly make a payment whilst maintaining your relationships.
For more top tips on how to successfully chase late payment download our free guide on what to do when an invoice exceeds terms. Or to see how Hilton-Baird Collection Services can help your business get paid faster, contact our team on 0800 9774848 or request a call back.