So, 73% of small businesses have had trouble collecting invoices in the past 12 months. What’s even worse is that these small businesses who deal with late payments are spending 6 hours a week chasing them. “Time is money” is a saying for a reason and no small business owner should be wasting their’s trying to collect. Learn how collecting invoices is wasting your time and how to make getting paid become one of your most efficient small biz practices.
Don’t you just hate when you send a customer an invoice in the mail and you get it right back with those awful words “RETURN TO SENDER”. Then, unfortunately, you have to call or email the customer to try to get their correct contact info and take even more time to resend the invoice to the new address. It’s an aggravating process and one you should not be involved in. Prevent this from happening. Keep an open, continuous line of communication with all your customers, which helps them not forget to tell you when they move and change addresses.
In fact, make it a part of the credit application. Have customers sign the application which states “If a customer changes contact information, it is their responsibility to inform of the change, otherwise payment notices not received due to changed address will still be charged payment consequences if not received by due date.” Motivate your customers to keep you informed and help save time when collecting invoices.
Speaking to the Wrong Person
Make sure you are dealing with a decision maker when it comes to collecting invoices. You are COMPLETELY wasting your time if you’re not communicating with someone who has the power to write you a check. If you’re calling a customer in regards to payment, ask specifically and clearly whether or not they have the ability do so. If they don’t, ask to speak to someone who does. It’s amazing how much time this will save you in the end.
If you’re going to take the time to send a customer a payment reminder letter, you better make it worth your while. Don’t just simply remind the customer; MOTIVATE THEM. See to it that you only have to send one letter when collecting invoices. Make the language in your letter strong and to the point. Be specific about what will happen if the payment isn’t received soon. Will you add a finance charge? Will you report their late payment to the credit bureaus? Customers need a reason to remember to pay. Use these letters to get the job done. Don’t waste your time sending more letters than you need to.
Making Things More Complicated Than They Should Be
If the only way you accept payment is by check, you already are doing yourself a disservice. You are literally making it take longer for you to get paid. Think of the time it takes for a customer to cut a check, to send the check and then for you to sit and wait for it. Add a few days of a customer putting it off and the waiting time doubles. Don’t make paying you be a difficult thing. Offer payment options to your customer. Accept credit cards and ACH. Make online payments available. By giving them more options, which all happen to be quicker than sending a check, you’re cutting out the tediousness of sending in payment, making it easier and FASTER for your customers to do so.
Trying to Do It All Yourself
There are just some times that you must realize that a collection has gotten too complicated and you can’t do it all yourself. A good example is when a customer seems to simply have disappeared. Unfortunately, you don’t have the tools to track this customer down. It’s times like these that turning to a reputable collection agency when you are collecting invoices is a wise choice. Although a path designated for only the most stubborn customers, you should realize that it is ok to turn elsewhere for some help.
This article was originally published on Funding Gates. Funding Gates is the world’s first CRM platform for receivables management. Serving as an online credit department for small businesses, Funding Gates is set on making managing receivables the easiest part of running a business.