It is important for businesses to have a healthy cash flow and to have a health cash flow, you need to ensure that you get your payments on time. However, in reality, there will be clients who will not pay on time and this will affect your business and may even frustrate you. Here are a few tips on how to avoid overdue accounts for your business.
Send Regular Reminders
In the case of overdue accounts, it is important to follow up regularly. You should send regular emails once the due date is 10 days away, 5 days away and on the due date itself. If the payment is still not received read through the next point.
Send a Friendly Email
Once the due date has passed, subtly send a friendly email to the client attaching the invoice and telling him in a very casual manner that the payment has now exceeded the due date. For example, “Hi Josh, how is it going? The invoice is now overdue and I was wondering whether you would have the chance to pay the attached invoice? It is now overdue. If you’re having any issue, you can call me anytime”.
Send a Statement
If friendly emailers have failed – don’t get annoyed. Stay calm and send another email but be firm this time. You have to be professional and hence, ensure that you do not get angry or aggressive.
Pick Up the Phone
If you have sent friendly emailers and a statement, and yet the client is not responding or delaying the payment, then you need to take action by calling him up. Call up the client and have a professional but friendly conversation, remember you need to maintain a good relationship with your client. When they answer a call, ask them if they are having an issue with the payment. A simple “Yes” or “No” from your client will determine your next move.
Warn About Interest on Late Payments
After trying all that you can, contact the client and tell them that you will be charging a certain percentage of interest on the invoice due to late payment. Point out the number of times you have reminded them about paying the invoice but because you have not received them on time, you are charging an interest.
Reward Customers for Paying Early
Reverse psychology can be used here. Customers who pay well before the due date should be rewarded with a rebate so that it acts an incentive for paying before time. Customers who are loyal will definitely pay before time and you should definitely maintain a good relationship with them.
Managing your overdue invoices can get tiresome and you may not give much attention to your business. As a result, running after your clients for payments may affect your productivity. Therefore, if you do not want to face these problems, it is recommended that you hire a professional accountant who will look after your financial transactions and ensure you avoid overdue accounts and maintain a healthy cash flow for your business.