My process for following up overdue accounts – to get these paid faster.
I hate being the bad guy. And I hate chasing late payers. But I need to be paid (I want to eat this week after all). So in this post I share my process for following up on my overdue invoices. But first, my Number One Tip for getting your invoices paid….
Set up a system and BE CONSISTENT!
These are the steps I follow once the invoice is overdue. To find out about tips you can use before due date check out my post on getting your invoices paid faster.
- 1 Day Overdue – yep that’s right as soon as the invoice is overdue. I send a very friendly reminder email, advising that I haven’t seen payment in my account, and that I wanted to check that they had received the original invoice, and didn’t have any questions. Include a copy of the original invoice. Keep it nice and friendly, it’s just a reminder at this stage. Give them the benefit of the doubt – they have likely misplaced your invoice or forgotten to make payment.
- 7 Days Overdue – If you haven’t heard from them yet, it might be time to follow up with a second email or phone call. Still polite, no need to be harsh. You don’t know what could be going on for them.
- 14 Days Overdue – Time for a phone call if you have not previously heard from them. Keep it polite and to the point. After the call follow-up any agreements with an email so you have everything in writing. E.g. Hi XXX, As per our earlier phone discussion, I look forward to receiving your payment on the 20th. Please let me know if you have any problems. Regards.
Xero have released a fabulous tool called invoice reminders which means you can automate all of the above reminders to be sent out via email at dates you choose. The message inside each email can be completely customised. Find out more about this feature here.
If you can’t get hold of them and have still had no response, it’s time for a Letter and copy of invoice to go in the post to the client.
- Statements – I send these out (via email) on the 1st of the month to any clients with overdue balances.
- Payment Arrangements – If your clients seem to be struggling get a payment arrangement in place ASAP. Getting even $10 per week is better than nothing.
- Interest on Overdue Accounts – Make sure you have it stated on your invoices that all overdue accounts will incur interest charges at xx% per month. If you have had no contact from a client for payment, and the invoice is 1 month overdue, add an interest charge. This will get most people to pay up fast…. often without paying the interest, but at least they paid 🙂
So those are the things I do for overdue accounts. What do you do?
Want to get these tips straight to your inbox? Sign up here