When you have an unpaid debt the lost thing you want to do is anger your debtor. It’s important to handle the situation with restrain and politeness. However, that can certainly be tricky when you’re frustated and need that cash back in your business. So, to help we want to give you 7 steps to polietly ask for overdue payments.

90% of SMEs have customers that don’t pay on time. As a small business owner in Australia, it’s inevitable that at some point or another you’ll deal with clients not paying their invoices. In this situation, you need to be able to quickly chase up payments, while maintaining a high-quality professional relationship.

Managing your cash flow is essential for keeping company finances healthy, but so too is retaining the customer base that you’ve worked so hard to establish. Here’s how to reach that fine balance of chasing overdue payments politely, so you can keep your clients happy while keeping your cash flow in check.

7 steps for politely chasing overdue invoices

Outline clear payment expectations in your contracts.

They say that prevention is better than cure, and the same goes for overdue payments. Contracts are an important point of reference if you end up chasing late payments. It’s essential to include payment terms from the outset in your business contracts with clients, so everyone’s expectations are clear and aligned.

In your contract, include invoice payment details, dates, and late payment terms and conditions (such as the process of following up payments, and whether interest is applied). Our partner law firm Celtic Legal can help you optimise contracts, terms & conditions, agreements and other important documents.

Implement a strict process for tracking and chasing payments.

With digital bookkeeping tools such as Xero and Quickbooks, it’s easier than ever to track outstanding invoices, and implement an automated overdue payment reminder email cycle.

Build a standard procedure for following up payments from customers. For example, send an email reminding your client that payment is due, and establish clear follow-up points for when an invoice is 3 days overdue, 7 days overdue, and so on.

Follow up emails with reminder letters.

Email is often the first step of chasing a late payment invoice. If you don’t receive payment after several emails, it’s time to try alternative communication methods.

Follow up your overdue invoice reminder emails with a reminder letter to your client’s business address, along with a copy of the overdue invoice, in case they did not receive it via email.

In your letter, invite the client to contact you to discuss payment. Provide your contact details so they can proactively reach out if they’re experiencing any issues.

Escalate communication.

Once you’ve sent emails and posted a reminder letter (to no avail), it’s time to make a phone call to your client. Stay professional and calm, yet firm when reminding them that payment is overdue.

Phone calls are more personal in nature, so be prepared – the client could share information on financial difficulties or personal situations that have led to the delay in payment, and you’ll need to remain professional throughout this conversation. At this point, consider offering alternative payment methods such as partial payment, or an instalment plan with interest.

Finally, if your payment is still outstanding, it’s time to escalate to a letter of demand, with a clear date that payment needs to be received by, or legal action may be taken.

Prepare your communication script in advance.

Whether it’s through emails, letters or phone calls, your tone of voice is critical for chasing payments politely. Wording plays a big part in helping you maintain a professional but courteous relationship with your clients. The more you plan your communications in advance, the better. Having a script will help you to keep your goals for the conversation in mind, regardless of what happens, so you won’t get distracted from the purpose of contacting the client.

Start your email communication off in a friendly manner and provide a gentle reminder to clients that payment is overdue. If payment still isn’t provided after a few emails, adjust your tone to be more serious, without coming across as threatening or aggressive. Refer back to the terms of payment outlined in your contract, state when payment was due, and include information on follow-up steps if the invoice remains unpaid.

Also, no matter how frustrating the situation can be, remember to always remain professional and polite. Don’t threaten clients or use intimidation tactics – this can work against you if the debt collection escalates to legal proceedings. If the situation escalates, trying to lower the tension if possible without backing down from what you’ve already said.

Keep a record of all communication.

When chasing late payments, it’s important to keep a detailed record of follow-up communications with your client. Have these on hand when contacting your client about overdue invoices, as these will support your reason for chasing the payment, and help you remain professional and calm during the conversation.

In your records, including the original date that the invoice was sent, the due date of payment, dates of emails, letters, or phone calls, and copies or logs of communication whenever possible. If the debt needs to escalate to legal proceedings, these records will also help support your case.

Bring professional debt collectors on board.

If you still haven’t received payment after several communication attempts, it’s time to bring in professional debt collectors. Debt collection agencies have a comprehensive understanding of legal requirements for recovering debt and can help you collect overdue payments quickly and effectively. They also have more scope to deal with elusive debtors than the internal debt recovery practices of your businesses.

When choosing a debt collection agency, take the time to understand their techniques and processes, as well as the tools they use to help investigate any hard-to-track debtors.

Bringing a debt collector on board sends a clear signal to your client that you’re serious about recovering your outstanding payment. That’s why it’s essential to choose an agency that can help settle overdue payments without damaging the relationship with your client.

If you’re chasing outstanding payments, we can help you recover unpaid invoices quickly and effectively. ProfColl is fast and discreet, and we know how to solve complex situations regarding debt recovery. To find out how ProfColl can help your business with outstanding payments, visit our services page.

Why Choose Procoll?

When you need some debt recovered, Profcoll is the agency to turn to. You can trust over 20 years experience in the industry with expert debt collection, with expert account managers to see over every detail of your case. At Profcoll, we employ the latest modern techniques to adapt to all scenarios throughout the collection process. There’s no joining fees or letter fees – just a commission, but only if we deliver your cash. We don’t get paid, unless you do.

Whether you’re living in Brisbane, Melbourne, Sydney or Perth, we can help recover pesky debts. We have offices all over Australia to service all kinds of business, including small and medium business, and sole traders. Whatever your business, we know that unpaid incomes can seriously damage your cash flow, so we want to get that money back where it belongs. If you need of some old-fashioned debt collection with a twist of modern technique, enquire today with Profcoll, free of charge.

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