For any small business, collecting on unpaid invoices can be a daunting task. It can be nerve-wracking trying to approach the conversation firmly enough to get you paid, yet delicately so as not to damage the customer relationship.

At the end of the day, you’re owed money, they’ve received your service or your product. If they’re happy and there’s no dispute, then there’s no reason why they shouldn’t pay you. You don’t go into a grocery store and say, ‘I’m taking this basket full of food, and I might just pay you in a couple of months’ time.’ So why should it be this way for you, your customers, or your small business?

Here are five easy tips to speed up getting money for those unpaid invoices.

1. Ensure the invoice has all the relevant information

It is possible to have too much information on an invoice. But you also need to ensure you have the right amount of info.

This includes the tax number if you’re registered, correct prices, quantity and description, payment terms and obviously the supplier and customer’s full names and addresses.

If your customer requires a purchase order number, or a reference, make sure that goes on as well, and make sure everything adds up.

Stay on top of details means your client has fewer reasons to come back to you with questions – and fewer reasons to delay payment.

2. Put your full bank details on all invoices and statements

Be very clear how you want to be paid.

Include details on the invoice like your bank account number and the bank identifier code. If you have other payment options or methods available, put those on the paperwork, too, such as via PayPal (give email address), over the phone by credit card, and so on.

Try to make it as simple as possible for your customers to make a payment. If someone has to stop the payment process to hunt for bank details, they are less likely to make the payment.

The option of sending a cheque, isn’t a great method to offer. They create further delays and put pressure on your business if they bounce (bad cheque fees etc.). This ‘no cheques’ policy could be amended as your relationship with the customer grows.

With modern accounting software you can have a button on your invoice for payment, this goes straight to your credit card supplier. Customers can then pay straight away. It really does make it simple!

Set out terms for your invoices early in the relationship. Ensure you agree something that suits your business model.

3. Pick up the phone and speak to your customers early

For larger invoices, give a courtesy call a week after you’ve sent the invoice to make sure it has been received and there aren’t any discrepancies. All sales invoices matter and should be paid on time but the larger ones should be treated with a personal touch.

Find the person responsible for paying invoices. If you’re regularly invoicing them, you’re going to build a good rapport. They know that you’re going to be chasing it. And after a while, they will know what you expect – and this can enforce regular payments.

If you wait until the invoice becomes overdue to make a call, only to find out it wasn’t received or there was an error on it, then it could put payment back another month as it may have missed the payment run. Don’t expect the customer to contact you to say there is a mistake or ask for their invoice – this rarely happens.

4. Keep a journal of all calls and responses

Accounting software isn’t just about the numbers. You can keep a note of when you contacted clients to chase invoices, and record what their responses.

If someone says, ‘I didn’t promise to do that,’ then you say, actually on this day and this time, you said you were going to send me payment – and I’ve not received it. Also, make sure you’ve got alerts on your diary system to remind you when it’s best to chase them.

When making notes, include at a minimum the date, time, who you spoke to. Of course, try to record as verbatim as possible and what their response was – especially for that first courtesy call chasing a payment.

If the person you contact knows you are keeping tabs, they are less likely to slide out of their duty to pay. Often in businesses there’s a secret pecking order of who gets paid promptly. By proving yourself a formidable force when it comes to chasing invoices and being able to strengthen your position by quoting previous conversations, you’re pushing yourself up that list.

5. Get the date right

There’s a handful of tricks around invoice dating, which are explained below. But a general rule is to invoice straight away. Don’t leave invoicing until the end of the month if you can help it.

Good advice is never to invoice on the first of the month. Date the invoice on the last day of the previous month because this makes the invoice fall into the previous month’s accounting for your creditor. For companies that run their payments net 30 days (ie, payment is 30 days after the end of the month of the invoice date) this will bring forward your payment by a month most of the time.

For example, an invoice dated 1 April will be paid at the end of May; however, an invoice dated 31 March will be paid at the end of April. Your payment terms may be 30 days but the majority of companies would just slot it into their net 30-days routine.

It is essential to establish payment terms up front. Some are set in stone and could even be 60 days net, which could mean you don’t get paid for 90 days after the invoice date. This is why this is important.


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About the Author

Keir Thomas-Bryant

Keir is Sage’s dedicated expert in the small business and accountant fields.

With over two decades of experience as a journalist and small business owner, he cares passionately about the issues facing businesses worldwide. His work has appeared in hundreds of publications and websites and has been translated into many languages

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