Chasing unpaid invoices is a delicate business.
Do it the right way, and you get paid what you’re owed. Yay!
Do it the wrong way and you’ll ruin opportunities for future business. Boo!
Consequences Of Demanding Payment For Overdue Invoices The Wrong Way
- You might annoy customers enough that they switch to one of your competitors. That’s lost future income for you.
- A client that is a huge fan of yours right now may stop singing your praises if they were forgetful once and you racked them through the coals with your angry demands for payment.
3 Mistakes Not To Make When Chasing Unpaid Invoices
1. Never stamp your statements with an OVERDUE! stamp before you send them out.
2. Never assume they have received any of your reminders so far.
- If you do assume they have seen your payment reminders you will get angry and your resentment will build up and up with every message you send.
- Bad idea.
- Consider the slate clear with every communication.
- That way, your tone will be light and cheerful instead of dark and sinister
3. Never let 30 days or 60 days go by without you taking any action at all.
- Train your clients on your expectations by acting fast when invoices are overdue only by a few days.
- If you let it slide 30 or 60 days you are teaching them (and yourself) bad habits
- As soon as you notice an overdue invoice, take action that instant
What Do You Think?
What other mistakes have you made in the past, or heard about, that you can share in the comments below?
Who do you think you are? A bank?
Leave the interest charging game to the banks.
Charging interest on overdue invoices gives your clients 2 choices:
- Pay the invoice
- Not pay the invoice (and start accumulating interest which they are pretty sure they can weasel out of with a phone call I they can be bothered)
Why give them 2 choices when you really want them to only take option 1 to save you (and them) all the extra hassle?
Focus on your goal: To get paid.
Charging interest on overdue invoices is a distraction from that goal.
Take a moment to picture your email inbox in your mind and imagine 10 or so unopened emails.
Now take a moment to consider the order in which you will open them.
Does the following order look about right?:
- Emails from people you know
- Emails from people you don’t know
- Emails from robots (email newsletters, automated emails)
The problem with automated payment reminders is that they are easy to identify as belonging in the 3rd category. And since it’s clear that there isn’t another person on the other end awaiting a response, they are also easy to ignore and/or trash.
Tell-tale signs of an automated email:
- The “from” field is not a persons name but a department or brand instead
- The “via” field is routed through a 3rd party email provider
- The language and tone of the body of the email is more formal than normal emails written by people
- There is no email signature from a real person at the bottom of the email
To increase the chances of getting those late invoices paid, all you have to do is dump the automated reminders in favour of the personal touch.
Do you invoice at the end of the month?
So you’re telling me that work you do on the 1st of the month gets invoiced on the 30th of the month and you ask for payment by the 20th of the following month?
That’s 50 days that money you are owed is in someone elses bank account.
And longer if that invoice is paid late of course.
It’s no wonder you have cash flow problems.
How about invoicing as you complete the work and have the invoice due within 7 days?
That would be 7 days before getting paid instead of 50.
If you own an overdue stamp then I have good news for you because today you are going to free up that drawer space or deskspace for something else.
By the end of this short article you are going to throw it in the trash because you won’t need it anymore.
First, imagine yourself as an accounts payable clerk sitting quietly at your desk with a pile of email or mail in front of you.
You open the first envelope/email and the document has a big red “OVERDUE” stamp that is shouting at you.
You feel like you were just slapped in the face with a wet fish.
Is that anyway to treat the person who is going to pay you?
It is a deep insult. It is shouting out “You are crap at your job! Paying invoices is easy but somehow you screwed it up! Wow, you really suck!”
That’s a great way to get your invoice shoved to the bottom of the pile because that’s their way of asserting their control over you after you insulted them. They don’t expect to hear from you for another 30 days anyway.
What you really want is for that invoice to be paid, right?
Using an overdue stamp will not help you achieve that goal.
So throw away your “OVERDUE” stamp now and find out how to get late invoices paid.
This book is very old now: 1994, but much of the advice is still pretty good.
It’s a very easy read – each of the 22 chapters are only a couple of pages each. It’s not available on Kindle which is annoying but there are a few pdf versions floating around.
I found the notes of Chris Anuman which were better than mine so that’s what you’ll see below.
I also came across a very interesting series of articles arguing that these laws are overturned in the present day that’s worth a look at.
My notes (Chris Anuman’s notes actually) on The 22 Immutable Laws of Marketing by Al Ries and Jack Trout Continue reading “The 22 Immutable Laws of Marketing by Al Ries and Jack Trout”
- Did you know that poor cashflow is the #1 killer of small businesses world-wide?
- Do you have clients with overdue invoices right now?
- Do you grit your teeth when you check your bank account on the 20th of the month and find the deposits you were expecting, missing?
- Are your customers/clients slow to pay?
- Are your invoices due on the 20th of the month but sometimes they don’t get paid until much later? Sometimes 60 days or 90 days?
Well you’re in luck, because today I’m going to tell you how I get the following results:
- 89.6% of my clients pay on time (within 7 days)
- 9.4% of my clients pay within 7 days past due
- 1% don’t pay at all, but only because they go bankrupt (no fault of mine, I assure you)
- I’ve never needed to use a collection agency
Here’s how you can get results like that:
Continue reading “Overdue Invoices? Simple Tips To Ensure Your Clients Pay On Time, Every Time. No More Overdue Invoices”
This book was pretty darn amazing.
I’m already a pretty optimistic guy but this book backed up that optimism with facts and reasoning. Fantastic stuff.
My favourite quote was “In today’s hyperlinked world, solving problems anywhere, solves problems everywhere.”
Let’s start with the table of contents because you might spot areas that interest you that you might like to know more about (I do encourage you to get this book, it’s only $15 on Kindle).
After that I’m just going to share my favourite parts of the book.
My notes on Abundance: The Future Is Better Than You Think by Peter H. Diamandis, Steven Kotler. Continue reading “Abundance: The Future Is Better Than You Think by Peter H. Diamandis, Steven Kotler”