• Zoe

How can I chase customers who aren't paying me?

Last week I spent a couple of hours chasing up a client's invoices. There was quite a long list of customers. Some had just forgotten to pay an invoice a while ago but somehow managed to remember to pay the rest, one customer had vanished off the face of the planet, and another customer was definitely good for the money but just hadn't gotten around to paying the last six or seven invoices. Sound familiar?

It's important to stay on top of who's paying you, because invoicing somebody for the great work you've done is one thing, but actually getting paid for it is entirely different, if your customers don't pay, you can soon find yourself in the realms of cash flow difficulties (and if you need any help with getting on top of your cash flow, you might like to read 6 ways to improve your cash flow after this one).

So how do you chase those pesky bad payers?

Know who has and hasn't paid you

The first thing is to actually know who hasn't paid you. If you raise your invoices through an accounting system like QuickBooks or FreeAgent, this is a relatively easy task, as you can just run an "Aged Receivables" report which will give you a lovely breakdown of all customers with outstanding invoices, and their ageing (ie how overdue the invoices are).

If you don't use an accounting system then I'm afraid the only way to know who hasn't paid you is to get together a big list of the invoices you've raised and look through your bank statement and tick off all of the invoices which have been paid. Sorry, that's quite a job isn't it. If you ever needed convincing that it was time to get an accounting system, this is probably it and you might also like to read 5 reasons why you need an accounting system.

Pull out copies of those unpaid invoices

When you chase up those clients, you're going to need to be absolutely sure of which invoices they haven't paid, the invoice dates and how much is overdue, so the best thing to do is to work through one customer at a time and pull together all of the invoices for that customer you're going to chase.

Get on the phone

Nobody reads all their emails. OK, I do try, but when you're busy it's easy to miss something. Also, if you speak to somebody about the outstanding amounts they'll remember there's an actual real person at the end of the phone whose livelihood depends on receiving payment for that invoice. So pick up the phone and call your clients one by one. Tell them who you are, and that you're calling in relation to some overdue invoices. Ask them when they will be paying them so that you can make a note in your diary and chase them up if the payment doesn't materialise. I try to be as friendly as possible, and the main rule is to be polite but firm. This customer could be a source of future custom from you so you want to remain on good terms and there's no point in making threats at this point.

Follow up on an email

Your client will more than likely need a reminder of the invoice that's outstanding, so send a short email reminding them of what you spoke about and when they agreed to pay you, and attach the invoices in question for their records.

Check your bank statement

Use those notes you made in your diary to follow up on the customers who promised to pay, and for those you couldn't get hold of, make a follow up call one week later.

Do this regularly

I recommend running an Aged Receivables Report monthly, for all of my monthly clients, this is a monthly task on my to-do list because it keeps you on top of things. If you're having particular problems with payment you might like to do this weekly or fortnightly at least until you get on top of things, but schedule it in your diary and make it a non-negotiable appointment with yourself to get done. After all, cash is the life blood of your business.

And what about those really bad payers, the ones who've disappeared off the face of the earth?

At this point you might think about involving a debt collection agency who will take a fee for chasing your customers and sadly for some customers, perhaps ones you know have gone under or won't be able to afford to pay, you might choose to write off the debt, but that really should be a last resort.


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