One of the most successful ways to get accounts paid on time is to chase for payment before the due date! Perhaps “chase” is the wrong word; “advise” your client of the amount due and the due date before that date may be a better way of putting it. Easiest way to do this? A simple email merge. Queries can be addressed, invoice copies sent out, amount/s charged / queried before the account even has a chance to become late. Brilliant!! I’ve applied this many, many times over the years with great success but only when it’s been properly and carefully introduced to the client base.
The wording used could be as simple as …
Dear Customer,
ANDREWS DIRECT- (ANDR13)
Amount Due – $31,104.70
We wish to remind you that at the end of this month the balance of $31,104.70 on your account is due and payable.
As previously advised, any accounts that are not paid on or before the due date will be put on to hold until full payment of the due amounts is received.
Please contact us if your records disagree with ours or if you need copies of any invoices that make up the above balance. If not, we look forward to payment of your account in the near future.
Karen Jones
Accounts Receivable
administration@yourcompany.com
Wording can be ‘softened’ or made even firmer depending on the sort of business you’re in. Send the email out around 21st of the month BEFORE payment becomes due.
IMPORTANT
be sure to gently introduce this change in procedures first with an emailout to the entire client base before sending the first one out. We did this at one of clients a couple of years ago. This was just one of many collection strategies introduced but it was certainly a major factor that reduced the 90day+ component of their debtor book by over 50% — in 2 months.
This has been yet another example of the results that can be achieved by applying the Three Principles!
Thanks
We call it in french ‘Lettre de rappel”
It seems to be very efficient if you organize your secretary to be able and aware to do this at due time by, for example, making a schedule for clients
Some of the steps to follow:
1. When you sign a new contract with a client make sure to get the name, telephone number and e-mail for their Accounts Payable person who processes the invoice.
2. If the terms of payment is Net 30, when the invoice is 3 weeks old send a friendly e-mail to the accounts payable person asking if they have received the invoice in question, if so when is the scheduled date of payment on the same. It is a good idea to attach the invoice that way even if they don’t have one they will get a copy.
3. See if your client can set you up on EFT rather than mailing a check, this will ensure faster funds in the account, and it will minimise the cases where check gets lost often.
This will definitely improve it by 50%, I know there are some situations where client is having a hard time paying the invoices, in that case you can use your best judgement to come up with a payment plan.