If you’re like many companies that I work with, it’s likely that you will have at least one outstanding invoice that is owed to you. If you’re like many people that I meet, you also probably find it hard to chase debt. However the likelihood is that you’ve already done the work, so now it’s time for you to get paid for it!
A process for collecting outstanding invoices
Ideally you’ll have some sort of process in place whereby once you’ve completed a job you invoice your customer or client. Hopefully you also have some sort of process whereby you check that payment has been received for all outstanding invoices. This might only be a monthly process, but it could be more frequent depending on the work your company does. You might seek to offer a small settlement discount; a discount for early settlement of the invoice. Many businesses like to have a discount, and whilst discounting willy nilly doesn’t make sense to your businesses bottom line profitability, it can encourage early payment of outstanding invoices. Hopefully your terms are clear, whether you expect payment immediately, within 7, 14, 30, 50 or 90 days.
What happens when an invoice has not been paid
When an invoice hasn’t been paid within your expected terms, many business owners don’t like to follow up. They don’t like to make “chasing” phone calls or emails. However it’s necessary. The risk is that you leave it. And leave it some more. It doesn’t get any easier to follow up, and sometimes the details of exactly what the invoice was for become a little bit fuzzy which doesn’t make it any easier. Perhaps non payment by them leaves your cash flow wanting.
Put yourself for a moment in the shoes of the recipient – the person who’s had the work and owes you money. They may not have paid you for any number of reasons:
- They’ve genuinely forgotten about the invoice
- They don’t have the money (this week / month)
- They have some sort of “issue”, real or perceived with the quality of the product or service you delivered
- They hope you’ve forgotten
A quick phone call will begin to determine which it is. Let’s take each of the above in turn.
- Perhaps they’ve genuinely forgotten, giving them a call will remind them to put a cheque in the post to you (or make payment through BACS).
- If they don’t have the money, they might not be forthcoming you can begin to agree when they will pay. If you’re just one of a number of businesses to whom they owe money – surely it’s better that you stay top of their mind with a regular call – they’re likely to pay those that shout loudest first. This is one way that debt collection agencies work.
- If they do have some sort of issue, when you call they they might say this is why they’re withholding payment – at least you now know what the situation is so that you can start to take action (whether to rectify the situation or let them know that the product is functioning “as designed”)
- Perhaps they hope that your accounts department isn’t up to much, and that you will have forgotten to invoice. They won’t feel guilty if you don’t chase. By giving them a quick call you can simply let them know that you are on top of your business.
What do you say when chasing an outstanding invoice?
Essentially you want to speak to the appropriate person, whether a private individual or, in the first instance, the accounts department. Then you simply want to remind them that the invoice is outstanding.
“Hi, can I speak to someone in the accounts department? I’m just calling about an invoice we issued, that’s now overdue for payment. Shall I give you the invoice number? It’s invoice XYZ, for 123 amount. Can you see it on your system? Given it’s now overdue, when will it be paid?”
Tips for chasing an outstanding invoice
- Keep records: the date of the call / email. The name of the person you spoke to, and the outcome (i.e. what was agreed). Hopefully you’ll never need this information – but it’s good practice – and can be handy to have records.
- You might be interested in our blog how to be assertive for “language” that you can use to have more “power” in a conversation
We have a range of tools and sample letters to assist you in getting payment for what you’re owed, give us a call on 07973 288043 and find out if we can help, our tools and techniques are ones you can apply again and again. Of course, you might be better going directly to a debt collection agency, an invoice factoring company or whether talking to a solicitor is the way to go – give us a no obligation call.