Expert Guest Post by Dean Kaplan, CEO and President, The Kaplan Group
You might be surprised to learn that, as much effort as women put into finding new clients, very few think about how to make sure those clients pay them. It can be uncomfortable to ask about unpaid invoices.
These tips will help you get paid on time and hopefully reduce the number of uncomfortable conversations you have to have.
1. Research First
Many payment problems could be avoided if business owners would research their clients.
Ask for basic information such as business name, address, phone number and website. In addition to this, it’s a good idea to have new clients fill out a credit application.
In the credit application, you can ask for additional contact information for other people in the company and include clauses that help protect you if your client stops paying their invoices.
Before beginning work, fully research the information you have and make sure it’s all consistent and true.
If the basic contact information does not check out, do not work with the client.
If the information in the credit application makes you uneasy about working with a client, you could consider collecting a larger deposit or structuring more frequent payments.
Do not brush away misgivings just because you’re eager for work.
2. Invoice Promptly
Think about how you pay your own bills. You probably know how much certain bills will be and when they will arrive, and then budget accordingly.
When you receive a bill, you pay it before the due date.
Now, imagine you didn’t receive a bill. For the first month, you might save the money aside but after two months? You might forget about the bill or assume they weren’t going to invoice you. Too often businesses lose money because they don’t invoice in a timely manner.
When an invoice is one day overdue, you should follow up with a polite email asking about it. Many new business owners baulk at this step. They are worried that asking about an overdue invoice will make them seem greedy or impatient.
Some female business owners find it especially difficult to ask about money. But, when you allow clients to pay you late, you teach them that it’s OK to pay you late. As long as you are polite, there’s nothing wrong with asking about a payment that’s due. After one week, you should follow up with a polite phone call.
It’s possible that your contact at a company will not be able to answer your questions about your payment. This is one reason you collected additional contact information in your credit application.
Avoid wasting time asking for information people do not have and instead go straight to accounts payable or a senior finance person. If you suspect that your calls are being avoided, you might try calling from a personal phone instead of your office line.
Once an invoice is three months late, your chances of collecting on it are greatly reduced. So, it’s important to stay on top of things.
3. Make it Easy to Pay
“The cheque is in the mail,” doesn’t really cut it as an excuse for an unpaid bill anymore. There are so many ways to pay and be paid.
The easier you make it for clients to pay you, whether by cheque, credit card or electronically the more likely you are to be paid on time.
In 2021, there’s no reason you should only accept payment by cheque.
There comes a point in the collection of any unpaid invoice where it makes more sense to bring in outside help. This is especially true for smaller companies that do not have staff trained in collecting unpaid bills.
Instead of spending time pursuing clients who do not pay, you could pursue new clients who will. In these cases, a reputable collection agency can help you collect money, while also protecting your professional reputation.
Asking people for money is difficult. But, the more professional and clear you are in your demands and processes, the more successful you’ll be.
How do you make sure your clients pay you on time?
About the Author
Dean Kaplan is President of The Kaplan Group, a commercial collection agency specializing in large claims and international transactions. He has 35 years experience in manufacturing, international business leadership and customer service. Today, he provides business planning, training and consultation to a variety of global companies.