Sending payment requests for overdue invoices
Following up late payments isn’t a job anyone likes doing. It often gets put off in favour of easier or more enjoyable tasks. Then you realise there’s a lot owing to you that you could really do with in your bank account.
When to follow up unpaid invoices
If an unpaid invoice goes past the due date, don’t wait long before you follow up with the customer to chase payment. You’ve done the work and it’s your money.
If you’re running an overdraft or have business loans, you’ll know that not having the money in the bank is costing you. And even if you’ve got cash to call on, money that’s late coming in is costing you the opportunity to do something else with it or to invest it.
Keep an eye on your accounts receivable (the list of invoices that aren’t paid) and tackle the oldest debts first. Aim to keep reducing the number of unpaid invoices and the total amount owing to you. In an ideal world everyone would pay on time, but until that day happens, get ready to chase up those late payers.
Ways to chase overdue invoices
If the invoice goes past the due date – and more than a third do* – you’ll need to prompt your customer. That often feels uncomfortable and it’s easy to put it off to another day. But you’re not asking for a favour: the customer has accepted something from you. Now it’s time for them to keep their side of the bargain.
So be polite, but act quickly if you don’t want bad habits to form. The longer you let an invoice go unpaid, the lower the chances that it ever will be.
* Xero invoices that were due and fully paid between July 2016 and January 2018
Pick up the phone
A phone call is powerful – awkward to make, but effective. It’s awkward for the customer too and that’s why it works. You don’t need to say much. Just be polite and friendly and tell them what invoice is late. Then let them do the talking.
They may have a perfectly reasonable explanation – whether they missed seeing the invoice come in or there’s been illness or a family bereavement that’s disrupted their routine. We’re all human, and this is where you can ask what would help them or suggest a solution.
If the client disputes some aspect of the invoice, stay calm and listen to what they have to say. Ask them to pay the rest of the invoice while you sort out the problem with them.
If you find yourself making a second or third phone call, stay polite but firm and outline what they need to do and the consequences of non-payment.
Always keep notes of your phone calls so that you have a reminder of the commitments your customer has made. And get into the habit of scheduling follow-ups in your diary, so that you check for payment and phone again if necessary.
Send an overdue payment reminder email
The least daunting way to chase payment is to send an email. Clever invoicing software has automated email reminders built in. Here’s a sample payment reminder email.
Send a statement
Sending a statement is another, less personal way, to email a reminder. A statement differs from an invoice in that it shows all the customer’s unpaid invoices, or summarizes all their invoices and payments, between two dates. Statements are most useful when a customer has more than one invoice awaiting payment.
Use an online system
You can remove yourself from the equation almost entirely by using online invoicing. This will make it simple to keep track of your invoices and watch your bank deposits for matching payments. If an invoice remains unpaid after its due date, the software automatically emails a reminder to the customer. So you don’t need to get involved unless the reminders go ignored for too long.