Chase your money - some tips on how to get your customers to pay!

When doing business you assume your customers will pay their invoices. But on occasion, some customers don't. Trish Curtis from Patricia Curtis Consulting is a freelance administration and accounts specialist and is sharing some of her gems of wisdom about getting customers to pay their invoices!

You're not a bank

You've provided goods or services to your customer and provided credit terms in good faith. It is not up to you and your business to finance your customer's business. You're entitled to be paid. Be proactive in recovering payment outstanding invoices.

Making THE phone call

Never be afraid to pick up the phone to ask your customer about their unpaid invoice. You never know when it will be a good or bad time for your customer - so don't put off making THE phone call any longer.

  • Be professionally friendly when phoning the customer. There is no need to be rude and don't forget they are still your customer.
    Tell them why you're calling. Try the line "according to our records it appears that your invoice/account is outstanding..."
  • Give them an opportunity to respond - human error may have occurred - even on your side, in your own record-keeping.
    Offer or agree to send a copy of the invoice - even if they ask for it multiple times.
  • If they reply with "the accounts person is in on Friday", then ask for that person's name and phone them back on Friday or ask for their email and use technology to your advantage.
    If they claim the invoice is paid, ask them to provide evidence of payment (a copy of the bank transfer - a remittance advice from their accounting system is NOT a payment confirmation). If they've paid by EFT. They could have:
  • Entered a wrong account number
  • Receipted it as paid in their accounting system and neglected to actually transfer the funds

You could have

  • Overlooked the entry in your bank account
  • Receipted the funds to the wrong customer's account
  • End the phone call with a timeframe and defined action plan. If they say they're going to EFT on Friday, let them know you'll check on Monday and call them if nothing's been received.
  • Regardless of the outcome of your phone call(s), send an email confirming your discussion(s). Useful for your records, demonstrates a level of professionalism on your part to your customer, and provides evidential proof, if required in the future.
  • Document every conversation that you have with the non-paying customer. You will need this evidence if you call in a professional debt collector.

Dispute resolution

If a customer hasn't paid they may (in their mind) have a valid reason as to why they're not paying your invoice (say, a perceived problem with the product or service you've provided). Every day you don't chase them confirms in their mind you know why they're not paying. This confirms why it is so important to make THE call.

Identify the perceived problem and their reason for not paying. What did the original contract say? Have you met all the terms of the agreement?

You need to discuss, fix or debate the problem to resolve the issue. Be clear, pro-active and follow-up.

Doing business with friends

But I can't chase 'John' for money. "He's a mate". Sound familiar?

Chances are you've given 'John' a sizeable discount because he's a mate and in doing so, your profit's already been compromised. The longer 'John' takes to pay, the less profitable the job. And, if 'John' was really a mate, he would have paid you straight away. If a friend owes you money, speak with them. Don't be embarrassed. True friends don't hold out payment.

If your customer can't pay

If your customer can't pay - make an arrangement with them to pay regular achievable installments. It is better to get smaller amounts regularly than bigger chunks less often - or not at all.

Getting concerned?

Get your facts together and call a professional debt collector if required, particularly if it is a large amount you're chasing.

Small debt, unpaid and annoying? Seek advice from your accountant about writing off the unpaid invoice as a bad debt. Refocus your efforts on getting new, profitable business.

Why are you providing credit terms?

Are you providing 7, 14 or 30 day terms because you always have, because your competitors do, or your customer's expect it? Think about it. When ordering goods online we pay upfront. We have no choice.

Have you ever thought about asking your customers for pre-payment? When a customer pays upfront, you remove the potential of having to chase the debt long after the product or service is sold and you can concentrate on getting more sales and increasing the profitability of your business.

Trish Curtis - Patricia Curtis ConsultingMeet the Business

Patricia Curtis Consulting is a Maroondah based business specialising in supporting sole-traders and small businesses with their day-to-day transactions - invoicing, accounts payable, general admin and basic bookkeeping.

Trish has over twenty years of accounts, administration and bookkeeping experience, across multiple industries and is proficient in both computerised and manual record keeping. Trish works with businesses to get the administration/paperwork side of their business under control.

Visit www.patriciacurtisconsulting.com.au for more information.