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How to politely chase late paying customers

13/08/2018 / Comments 0

How to politely chase late paying customers

One of the most challenging and potentially awkward jobs for any small business is chasing customers for payment when their invoices have gone beyond agreed terms.

Asking for money isn’t always easy, whether you’re the business owner or a credit controller. This is especially true if it’s a big customer and you’re worried about damaging your relationship or losing their custom – particularly when you’ve worked hard to secure it in the first place.

But never forget you are entitled to get paid for the work you provided, so it’s important that you get over your fears and tackle the issue head on.

To help you get over any apprehension you may be feeling, here are 10 of our top tips to help you politely chase late paying customers and maintain your relationships.

1. Remember you’re not being rude

If you feel yourself hesitating to chase a customer, remind yourself that you’re not doing anything wrong. You provided the product or service, the client agreed to pay and now you deserve to receive that money in full. By failing to pay on time your customer is putting their own needs ahead of yours which is far more rude than requesting something that you are entitled to.

Here’s why you need to let go of fear and act on late payment.

2. Set terms and expectations early on

By informing customers of your terms and conditions at the outset, you can establish expectations for both parties and avoid any potential awkwardness in the future. Plus, in the event something does go wrong, by being able to demonstrate your customer was aware of your terms you’ll have solid evidence that you can produce in court if needed.

Read more about what to include in your terms and conditions.

3. Inform clients of your late payment procedure

Make sure that your clients are aware of what happens in the event of late payment from the outset. This can include charging late payment interest, outsourcing the debt to a collection agency or taking legal action. Knowing this upfront will give your customers incentive to pay on time and, in the event that they don’t, you can follow your procedure without feeling like you’re taking unnecessary measures.

Discover how much late payment interest you could charge.

4. Pick up the phone

Whilst it may seem like a stronger tactic chasing payment over the phone, calling your client is much more likely to get results than emailing or sending letters. Sometimes the tone of an email can be misread so a phone call is more likely to have the desired effect. Plus, putting in regular phone calls will build a relationship with your customer so that they are less likely to avoid making payments.

Here’s what to cover in a courtesy call.

5. Have a script to hand

When chasing payment that is significantly overdue it can be hard to find a way to request payment that is firm but not aggressive. You can save yourself a great deal of time and stress by having prepared scripts for phone conversations and emails to that you don’t come across as too demanding whilst still allowing you to get what you are owed.

Is it ever OK to be aggressive to get paid?

6. Stick to a schedule

By having a clear credit control strategy, your accounts receivables team can adopt a co-ordinated and professional procedure. By knowing when the best times are to chase payment and threaten further action, you can avoid escalating situations too early which can damage relationships beyond repair. It’s unlikely that a customer who usually pays well will take kindly to being threatened with legal action as soon as they miss a payment, for example.

Take a look at this credit control timeline for a suggested schedule.

7. Ensure you’re dealing with the right person

It becomes really hard to chase missed payments when you’re not talking to the right person or department, or you haven’t followed the client’s payment process. If you don’t know, ask them directly how to ensure you’ll get paid on time. In the future you can find out this information at the start of your business relationship through an account opening form.

Here are 8 things that you should ask your customers before offering credit terms.

8. Know how to respond to common late payment excuses

Some customers will respond to your requests for payment with excuses for the delay. Whilst sometimes these can be genuine, more often than not they are merely stalling tactics. By having default responses to the most common excuses you can diplomatically find out whether they are telling the truth and speed up the payment process.

For ways to deal with common late payment excuses read this.

9. Partner with a professional debt collection agency

There may come a time when you have done all you can internally to chase an overdue invoice and you need the help of a debt collection agency. When choosing to outsource the collection of your debts you’ll want to make sure that you find a professional company that will maintain your customer relationships whilst getting the results you need.

Read more about working with a debt collection agency here.

10. Know when to seek additional help

Similarly, if you really struggle to know how hard to chase through fear of upsetting your customers you could benefit from outsourcing all or part of your credit control function. The credit control company will act like an extension of your own and keep in touch with your customers to ensure payment whilst you have the time to focus on other aspects of your business.

Discover the reasons, risks and rewards of outsourcing your credit control.

To see how we could help your business with its credit control or debt recovery needs contact us on 0800 9774848.

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