If you’re invoices aren’t being paid, you’ve got a real problem on your hands. Both payments coming in and money owed to you affect the profitability of your business. While sending an account to collections is certainly one way to hopefully get the attention of the person that owes you money, that takes place when you don’t get paid. Yet, there are some things that you can do now that can hopefully minimize the number of past due accounts in the future. So, we’ve put together this list of things you can do if your invoices aren’t getting paid.
Charge Late Fees and Interest
Make sure that you’re charging late fees and interest. First, doing so may prompt people to pay their invoices on time. Second, if the account ends up in collections, you may be able to use shedding the fees as a bargaining tool. Show your clients the math of how they’ll pay more if they’re late with their payment. If your late fee is 1%, spell it out for them: “If your balance of $_____ is not paid by DUE DATE, 1% is added to the payment and you will owe $_______.”
A small late fee or interest charge may not bother many people, but some people will recognize and appreciate that they can save on their bill by ensuring that they pay on time. With that being said, make sure that you understand any state statute that governs how much you can charge in late fees or interest. Make an announcement to all of your clients about the late fee or interest charge and make sure that you review your contracts and add in this information.
Send Out Your Invoices at the Same Time Each Month
One of the best ways to encourage payment is to make sure that your clients know when to expect their invoices…and for you to follow through on sending out their invoices on time. While you can’t always control the traditional mail service, you have other options that you can consider. Your billing software likely has a way for you to create and send out email invoices. Of course, you want to make sure that if you switch to “paperless billing” (as your clients may know it) you will want to ensure that they want to receive their invoices through email.
Working with Businesses?
If you’re working with businesses who haven’t paid, consider dropping by their offices to pick up the payment. The best way to do this is to call first to remind them about the payment. If they say that they plan to put it in the mail today, you can offer to drop by and just pick up the payment if they’re in your area. If they’re not in your area, offer to take a payment over the phone.
Start Follow-Up Calls the Day After an Account Goes Past Due
Check your accounts receivable each day and pull the files on any clients that have gone past due by at least one day. Follow-up calls should start the very day that your clients are past due. The longer an account sits without contact, the harder it is for you to collect. So, make the calls. Be polite and be professional.
Get Help with Your Past Due Invoices
Clients ARM provides help for businesses who have past due accounts. With more than 30 years of experience, we provide both first and third-party collections help to businesses of any size. Our collections rate is better than 90%. To learn how we can help with your collections and your billing practices, schedule your free consultation now.
