Tips for getting paid and how to communicate with customers who are slow to pay.

No business owner wants to chase payments but sometimes customers are slow to pay—or worse, don’t pay at all. That’s why you need a plan that’s built on the idea that collecting payment starts at the beginning of an order—not the end. Here are tips to help you set expectations for payment and what to do if customer accounts are overdue.

Be clear about terms

Before starting work, have a signed agreement in place with your customer that includes how you get paid. Your agreement could be a contract or statement of work that’s provided in writing. Whichever type of document you use, ensure it details the scope of work, delivery dates and payment terms, including late fees.

Having an agreement in writing when an order is placed helps keep you and the customer accountable. Their signature on the document serves as both an acknowledgement of what’s expected of them and protection for you in case you need to pursue legal action to get paid.

Have a communication plan

Many customers honor their commitment to pay on time. However, some overlook their responsibility. If you find yourself chasing payments, you need a robust communication plan.

Develop a series of messages that you’ll send by email or regular mail that remind and encourage customers to pay. The timing of letters could go like this:

• 1 day before due date: friendly reminder that the invoice is due tomorrow
• 1 day past due: polite but firm notice payment was due yesterday
• 30 days past due: urgent notice about outstanding invoice and that late fees are in effect (if applicable)

When clients pay send them a thank you message.

In addition to emails, collecting accounts receivable can be aided by phone calls. Sometimes a short conversation that starts with, “Hey, I noticed your invoice that was due yesterday wasn’t paid. Did you receive it?” can open the way to prompt payment. You want to ensure there was no miscommunication or error in the billing. Keep the conversation professional yet personable. You may learn that they didn’t get the invoice or had a personal matter that interfered with timely payment.

In some cases, conversations about unpaid invoices that are conducted with kindness can actually strengthen a business relationship. If you discover the customer has financial challenges find a way forward together, such as a payment plan. People who know you’ll work with them tend to be loyal.

Avoid future problems

If you’re constantly chasing payments consider collecting money in a different way. For example, you could require a deposit before work starts or set up automated payments. Another way to alleviate payment problems is to make it easier for customers to pay by accepting multiple types of payments, including credit cards.

If payment is never made

Unfortunately, sometimes legal action is necessary. If the amount due is less than $7,000 you may be able to file a case in Small Claims Court. Seek legal advice for more options.

Learn more

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