Create a timeline for managing late payments and collections.

It is common knowledge that the longer a business waits for payment, the more likely it will receive compensation in total, with less money being recovered each day. Although managing successfully received accounts is more than just paying on time - it's the art of handling customer credit, improving cash flow, and minimizing losses to maintain and grow a healthy business - It also means taking late payments successfully.

Late payment can and will be made. In fact, according to some statistics, more than a third of all receipts sent is paid after one-time charges. For this reason, some companies hire an external firm, such as the Interstate Billing Service, to handle invoicing and late fees. Companies that choose to run A / R at home must have a late payment plan, as fraudulent accounts can drag down the business.

Although clients always have their excuses for late payments, the workflow of payment reminders can help speed up the process. There are some of the best ways to consider when setting timelines for late fees and deposits.

How to set a payment reminder timeline.

Setting up an automatic workflow of payment reminders helps speed up late payments. Communication touchpoints may depend on the industry or business (phone calls, emails, or letters). Still, in any case, a regular timeline eliminates the guessing process for receiving a full payment as soon as possible.

Businesses should send a notice of late payment as soon as the invoice is late. Sending follow-up notices at regular intervals (such as 3, 7, and 14 days, etc.) should also be part of the payment reminder plan. Most accounting software can be configured to do this automatically and can be customized for the client.

The final notice in the payment reminder deadline should be a formal letter indicating that the account is invalid while offering a last chance to make a payment before going to the collection agency.

Send invoices immediately.

Don't be tempted to sit on the invoice after the product or service is complete. The sooner the invoice is sent, the faster it can make the payment. Some clients need a lot of reminders. Although many receipts are to be received today, many businesses agree that the best time to give an invoice notice is before the invoice is paid.

Also, consider adding pre-emptive reminders to your payment timeline. Providing clients with reminders from a few days to a week (net 7) or a month before invoice payment (net 30) can increase the difficulty of timely payments.

Prepare and formalize communication.

Whether it's a call, email, letter, or a combination of all three payment reminders, it's a good idea to write down all the communication points in advance in the form of standard letters and call scripts. It can fill details according to client and situation.

Not only will this preparation save time, but standardization of communication ensures that all users are treated equally. It also provides time for thoughtful touch instead of shutting down email in the heat of the moment.

Initial correspondence should be polite, friendly in tone, and gently bend customers to make a payment while giving them the benefit for a small amount.

Example:

Thank you for your business! We have not yet received your payment and would like to remind you that the payment time has passed. (If you've already sent a price, please ignore this message, and thanks!)

Reminders later should be more severe so that immediate action is needed. They should be clear about the consequences of non-payment without using threatening language or making noise in all CAPS.

Example:

We've contacted you several times about the Invoice. Since we have not received payment, we will need to forward your account to the collection agency for further action.

Be sure to include relevant transaction details in each payment reminder correspondence, including:

• A copy of the invoice in addition to the invoice number and amount due.

• Several pending days.

• Clear invoice payment instructions.

• Several ways to pay if possible.

• Consequences of non-payment (fines, fees, and receipts)

Final notice.

If a client ignores the final notice, now is the time to deem the account invalid, write off the account as a loss, and send the bill to the collection agency. It would also be good to dismiss the offenders repeatedly instead of wasting time paying them every month.

On the other hand, if and when a client pays, be sure to send a thank you receipt. This formality indicates that the payment was received and closes the payment reminder communication.