Collecting overdue and unpaid invoices can be a bit of a challenge. But with the right collection strategies in place, getting customers to pay their bills on time becomes easier (and, dare I say more enjoyable).
In this post, I’m sharing some effective collection strategies that have always worked well for me (and I’ve collected payments on A LOT of invoices!)
Collections Tips on Unpaid Invoices for Small Business and SMEs
In a small business, collecting unpaid invoices is generally just part of someone’s job. Someone that hasn’t had specialist collection training.
Following the proven steps below will build confidence and collections and collections will become much easier. You’ll start to feel like a Collections Professional!
Before starting to collect your unpaid and/or overdue invoices, check to see if anyone else in the company has spoken to the customer recently.
If no-one has, it’s still worth treading gently initially. Your customer may not have paid their invoices because they have an outstanding query.
Always make the first contact with a cool, calm and customer service oriented approach. A fact-finding mission.
The last thing you want to do is to go ahead with ‘all guns blazing’ and find out that something is wrong with the shipment or invoice. It could be embarrassing if your customer is waiting for your business to sort something out!
Remember: Only When Payment Is Received Has the Company Really Made a Sale
Getting customers to pay their bills on time, and collecting overdue invoices, is a really important aspect of business.
Without payments coming in, it’s just a debt to your company. That’s a step backwards.
Any and every business needs a few collection techniques and strategies to help to grow and prosper, so knowing how to ask for payment politely is crucial. You can find out more about how to make collection calls in a small business here.
Because it’s such an important part of business, when being responsible for collections is part of your job, set a little time aside every day to call your customers.. With a few good collection strategies and some consistency, you’ll soon start to get your invoices paid on time. Then you won’t have to chase unpaid or overdue invoices. Life will be easier and much less stressful.
5 Proven Collection Strategies
Customer Playing ‘Hard To Get’?
Call at a different time of day and call every day if possible.
If your customer is hard to track down in the morning, you may catch them in the afternoon or before / after business hours.
Can’t Get Past The Gatekeeper?
If you call the customer and ask “can I speak to John Brown” and he’s always “in a meeting”, you could ask the ‘Gatekeeper’ instead (the receptionist for example) “Is John Brown there today please?”
That way, you can find out if he’s there but not taking your call.
- Ask the Gatekeeper for help “I really need to speak to him/her…do you know when they might be free?”
- Call before and after working hours. Busy people often go to work early and/or stay late
- If you think the customer or gatekeeper might recognize your voice, ask your colleague to call. They can pass the phone over to you as soon as your customer comes on the line.
Provide AWESOME Service
Everyone loves good service and it’s SO rare these days. It’ll make you immediately popular and well thought of.
When collecting unpaid invoices, the first thing to do is make sure that there is nothing wrong or outstanding with the goods or service.
Make sure too that the invoice is correct.Then ask “is there a problem somewhere that I can help you with? “or “When is it scheduled for payment?”
Avoid Unpaid Invoices by Asking “Is There A Problem?”
Once you know that the goods, service and invoice are all fine but there’s no scheduled payment date, you can politely ask “Is there a problem?”
Most people hate to think that there’s a problem in their company! They will pay you just to prove that there isn’t a problem.
Use Open Questions to Get You the Answer You Need
Use ‘who?’, ‘what?’, ‘when?’, ‘where?’ and ‘how?’ to find out what the problems are
- Who needs to authorize this invoice?
- I really need to speak to him. What time will he be back from lunch?
- When is your next scheduled payment run?
- Where is your warehouse located?
- When will you be able to check that with the Warehouse Manager?
- How will I know if those invoices are included in the payment run on Friday?
Asking open questions is one of the most effective collection strategies to improve collections. It’s a great way to get a customer to commit to paying so do use them when you are collecting your due or overdue invoices.
If you remember to pause after asking them, your customer will fill the ‘uncomfortable’ space and give you the answer you want.
Keep asking questions using these words until you find out exactly what’s happening with your payments.
How to Ensure That Collecting Unpaid Invoices Is a Thing Of The Past
Here are some more easy business collections strategies you can put in place to set yourself up for collections success.
The idea here is to use some strategies to encourage your customers to pay their invoices on time so that you don’t have to collect unpaid invoices
Checklist to Set Yourself Up for Collections Success:
- Call new customers to introduce yourself before you send out their first invoice.
- Find out if the goods / service received exactly as ordered and your customer isn’t waiting for anything
- Check the address that the invoice is going to and the person that it should be addressed to
- Make a ‘customer service’ call before the payment due date. Just to make sure the invoice is correct and with the right person.
- Make notes of conversations with customers and refer back to them to sound like a knowledgeable professional
- Build a friendly but professional relationship with your customer. Get them to like you. People who like you pay you!
- Always use the telephone to contact your customer (unless you are confirming an agreement). You can’t build a relationship by email
- Use email to confirm agreements and conversations
Putting a few easy collection techniques and strategies in place to get your customers to pay on time is an essential part of business success.
Follow the collections tips here and you won’t end up wondering how to collect overdue invoices. They’ll be all paid by the due date!