What to do when my invoice payment is late?
2 out of every 3 small businesses in United States struggle because of customers that can't or don't want to pay.
A brief guide to invoice like a pro | 1
The magic of follow-up emails It’s often estimated that 20% of all invoices around the globe will be paid late. It’s a huge problem, but you keep running your business as usual. After all, who wants to deal with it? Chasing and reminding your customers to pay is time consuming and you don't want to put your relationships with your customers at stake. So what's the key to overcome this awkward and frustrating situation? In the past couple of years we’ve worked with over 2400 companies facing the exact same problem. What we’ve learnt in helping them is that the most effective way to reduce the risk of late payments is to constantly follow-up. Yes, follow-up, follow-up, follow-up! We’ve noticed that people who follow-up on their unpaid invoices at regular intervals were able to reduce the rate of late payments by up to 47%. That means this is something you can take control of and we’re going to show you how.
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Remind them before it’s late
Sending a payment reminder email before the invoice is due is the most significant factor when it comes to increasing the likelihood of on time payment. When it comes to collections communication, time is of the essence. The more time passes that past invoices are past due, the likelihood of a successful collection decreases.
An invoice that is 90 days past has a 73% chance of successful collection, while an invoice that is 6 months past due has a 44% chance of successful collection, and an invoice that goes unpaid for over a year only has a 25.3% chance of successful collection.
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Reminder schedule which tend to yield the highest success rates
1. A payment reminder email 7 days before due date. 2. Another follow up the very day the invoice is due. 3. An additional payment reminder for each past due chunk (7 days, 30 days, 60 days, 90 days). 4. A final email/letter on demand (120 days after due date). 5. Hand over to collection agency. In most cases, the first 3 reminders should do the job.
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How to write more effective reminders
Two key things that make a reminder email effective are the language and the timing. And when I say language, I don’t mean just the words verbatim, but the actual psychology of the message. Here’re few guidelines to have in mind when crafting these delicate letters:
Set a personal, warm tone. Be polite, empathetic, and understanding.
Include key details about the invoice (number, amount due, days due).
Attach the invoice or include direct link to it.
Mention your payment options (if possible provide them an option to pay online).
Keep it short, to the point.
Handle each past due invoice separately.
Use the version of your business’ name that is most familiar to the company.
Include details about any previous correspondence.
Gradually increase the tone in each subsequent reminder.
CC the message to the company’s key people (after the 5th email)
Don’t use UPPER CASE or Camel Case in the subject line (you don’t want your email to look like an ad or a newsletter).
HIT them at the RIGHT TIME. What to do when my invoice payment is late? | 5
TIPS The first couple reminders should be human, non-intrusive and friendly. They are intended to remind customers of what they might have missed and keep them informed without leaving any bad taste. They wor