Late payment is the bane of the small B2B business.

If you’ve put the work in, delivered a service and sent your invoice you should be able to expect payment on time, right? Wrong.

It’s a fact thaAlarm_clockt the majority of businesses that extend trade credit have trouble collecting payment on time. A recent survey by cloud accounting giant Xero showed that, on average, businesses saw payment 14 days after it was due- whatever the payment terms on an invoice. In fact, our own research earlier this year also showed that more than half of invoices are paid late.

If your business sees these all-too-common issues, you need to implement a credit control procedure. You may already have one, even if you aren’t aware of it – whenever you give your accounts payable contact a call chasing payment, that counts – but now is as good a time as ever to lock down the process.

Don’t dread credit control

I know it’s dull. I know it’s the last thing you’d like to do today. But – please – whatever you do, don’t neglect credit control. Make sure it’s the first thing you do every morning.

If you leave chasing payment until when the invoice is very overdue, you won’t have a chance to be Mr. Nice Guy. You’ll have to resort straight to anger or blackmail, and that really isn’t fun for anybody.

Instead, check in with your client one week after you sent them the invoice in the first place. Make sure you have a named contact, not just an info@ or accounts@ email address, and simply call them for a friendly chat and to check that they received the invoice safe and sound. A bit of schmoozing never hurt anyone.

Follow up with a nice email. Be sure to include all the important details:

  • How much do they owe you exactly, including tax?
  • What was the invoice number, and the purchase order number?
  • When are you expecting payment?
  • Has there been any problem with the product or service that could delay payment?

Include your contact details on the email and wait to see if they reply. Now that everything’s in writing you’re much better placed to chase the invoice nearer the payment date.

When the invoice is overdue

Once you hit the expected payment date, check your bank account. Maybe they’ve paid on time…

No?

No problem. You’ve already set yourself up for this with your prior chat with your accounts payable contact. Call them again and point out the follow up email you sent.

Be polite, be persistent- just don’t be apologetic. It’s your money, after all.

If these tactics don’t work, and you’re looking at over a week or two overdue, it may be time to escalate. Here’s where having a Finance Director, MD or another partner on hand can be very handy. Create an escalation process for unpaid invoices whereby you pass on the issue to someone more senior or more relevant. Hopefully your customer will see that you’re serious and pay up before you need to threaten them with further consequences.

Say thank you

So you got paid – great! But why not go the extra mile and email your client to thank them for payment? It’s a great way to surprise them with kindness, warming them up for the next time you need to get on the phone to chase payment.

If you have any more ideas on how to implement a flawless credit control process, tweet us @MarketInvoice. We’d love to hear your thoughts!

Got a question?