November 20, 2020  
 
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Dos and Don'ts for Getting Paid by Customers

Written by Chris Martin for Gaebler Ventures

Many small businesses have clients who are tardy with their payments on invoices. It's important as a business owner to get paid, but you don't want to chase away a customer by being too aggressive in demanding payment. Here are some suggestions on getting invoices paid on time.

Entrepreneurs love the feeling of success.

They love to birth an idea and polish it until it's viable. Then after making a business plan, crunching numbers, and securing funding, they get to launch their enterprise, promote it on their website, and market it to their target audience. And when clients call and agree to purchase goods or services, it really makes entrepreneurs feel special.

But entrepreneurs absolutely hate having clients who don't pay on time.

Chances are, entrepreneurs didn't open up their businesses just to spend all their time collecting overdue invoices. So they may not know how to handle their accounts receivables properly. Here are some dos and don'ts for getting paid.

DO institute limits regarding credit and time. The easiest way to do this is in the original contract or services agreement. For instance, set a payment due date of 30 days from the invoice date, and institute a cap on how high of an outstanding balance a client can run up before stopping service or forwarding the invoice to a collection agency.

DON'T let clients exceed previously-set time or credit limits. You determined the limits for a reason, so stick to your guns. Giving them more time or credit will just encourage them to do the same thing next month.

DO implement a system to send out invoices. Send invoices the same way (email, snail mail, etc.) each time and do so consistently with each purchase (like the day after each new service or product is ordered). If you provide an ongoing service, invoice customers on the same day of each week, month, quarter, or year.

DON'T vacillate on your policies. It's not uncommon for customers to push small businesses for breaks on rates or payment schedules. They think that since you're the owner, you can make an exception for them. Being accommodating is nice, but being consistent and profitable is better.

DO follow up invoices with a call. You should make these calls one or two weeks after the invoices are sent out. This not only makes sure that it arrived safely to your client's accounting department with no surprises, but it also keeps you on the customer's radar – so they know you're expecting payment on time.

DON'T send out invoices "willy-nilly." Make sure the invoices stick to your schedule. If you can't handle this yourself, hire someone else to do it or automate the process. The more random your invoice procedure is, the more likely you are to make errors or oversights.

DO remain calm. If you are dealing with a problem payer, it is perfectly natural to be angry. Just don't take your anger out on the customer. It won't get the bill paid any faster, and it may very well damage the relationship.

DON'T put off calling on overdue invoices. It's your money, so you are entitled to inquire about it. So contact your customers and ask them nicely about the overdue invoice. In many cases, it has just been misplaced – so waiting to call is like frittering away the interest you would have earned on that money in your account.

If these actions don't solve the problem, hand the account over to a collections agency or your attorney. Don't threaten your client with anything unlawful; that could result in a nasty harassment charge against you. Just let the professionals handle it, and you concentrate on finding more clients to replace the problem payer.

Chris Martin has been a professional writer for the last seven years. He is interested in franchises and equity acquisition.

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