By Conrad Ford
For start-up companies and small business managers there are few more agonizing issues than deciding on how best to pursue payments from valued clients. There is a fine balance to be struck because you’ll want to retain positive relations without being taken advantage of or being left out of pocket for a damagingly long period of time.
Here’s 5 tips for simplifying the process and making sure even your most valuable clients pay your invoices on time.
1 – Don’t be afraid to ask
Enquiring as to the status of your invoice, whether it is overdue for payment or otherwise, is never going to be interpreted as an unprofessional or confrontational act on your part. In fact, any client, company or service provider worth doing business with will understand that you need to know whether or not payments are on their way. Therefore, you should never be concerned that an enquiry about an invoice will carry any kind of negative connotations or in any way jeopardise a relationship you consider valuable.
2 – Give your client a call
Rather than sit around worrying and wondering about whether or when an important invoice might be paid, you should pick up the phone and call someone who might be able to inform you with certainty. This is particularly the case of course if your important invoice is already overdue, in which case you’ve ever right to enquire, to urge your client to make the relevant payment and to seek reassurances that your invoice is in fact being processed as it should be.
3 – Be polite but don’t be easily put off
Politeness often goes a long way in the context of small business operations and particularly when it comes to securing the relationships that underpin them. However, while you should always be well mannered in this context, you should also be persistent when you’re chasing payment from people or organisations you’d like to work with again in future.
It’s important to remember that seeking payments and clarity on invoices is not a hostile act and a polite approach is just as likely to instigate the results you want than a frustrated one. Crucially though, keeping your cool can be the difference between retaining a good working relationship and turning it sour.
4 – Look into automating your processes
There are many ways in which personalisation can help improve client communications but in the context of chasing up payments on late invoices the personal touch is not necessarily an advantage. In fact, automating the communicative processes involved and sticking to the same game plan in every instance can help remove some of the potential awkwardness or difficulties involved.
5 – Use third parties if problems persist
Clearly, no business manager or director will want to be in the position of having to seek third party assistance to recover money owed by an existing client. But cash flow is so important to small businesses that leaving invoices unpaid for a lengthy period of time can cause serious financial difficulties and have wide-ranging ramifications. So, third parties can actually be a big help and they should be brought in if you really need to see an overdue invoice issue resolved quickly. The key is to exercise discretion and, if possible, to avoid seeing a payment problem become a big deal that causes a relationship to breakdown.
It can be very challenging for small businesses to ensure regular and reliable payment on their invoices and there can be a tendency to overlook lateness involving valued clients. A proactive and uniform approach though can help separate issues around invoices from otherwise healthy and mutually beneficial working relationships.
Conrad Ford is the founder of Funding Options, which provides a range of online tools to help firms and their trusted advisers to manage funding and cash flow.