Not a fun topic, I know…
But if you find yourself in this situation every month, chances are you need to change something.
Never knowing when you’ll get paid can be exhausting!
Not to mention how disruptive can it be for your business. The more money enters your business the better your cash flow. So how can you ensure a steady flow of cash?
Let’s talk about a few things you can sort out in order to stop chasing your clients for their debts each month.
1. When do you send your invoices to clients?
Most of the time, people forget to send out their invoices on time. As a consequence, the process of getting paid is delayed.
Let’s say you have a plumber coming over to your place on a Monday. They don’t give you the invoice then and there, but you receive it two weeks later. Are you inclined to pay it straight away? If you get the invoice there and then the statistics say you are 80% more likely to be paid on time.
2. Create a follow-up system for delayed payments
If you have a follow-up system in place, you won’t have to do the actual chasing. The chasing will happen automatically. Brilliant, right?
Here are a few suggestions that can help you start your follow-up system right now:
Get your invoices out early (very important!)
After 14 days, send out an update in the form of an e-mail, reminding your client how much money they owe you
After 30 days make a phone call
After 40 days send them another e-mail
After 50 days send a letter of demand
Having a follow-up system in place to consistently remind your clients how much they owe you can be useful in case you take the issue to court. You will have evidence proving you’ve made a considerable effort to remind this person they owe you money.
Tip: Reminders are a key factor to efficiently recover your debt.
The truth is, people usually forget to pay you. There are genuine people out there who just have a hard time managing their business properly. Sending them reminders usually solves the issue.
Bonus Tip: You can automatically send out your reminders to all the people who owe you money with programs like Xero, Saasu and MYOB.
3. Eventually, you can take matters into court
What happens if a client still doesn’t pay you, even after you’ve sent them countless reminders?
You can send them a letter of demand
Make a liquidated damages claim at your local court
Contact your lawyer for more information about these two legal actions available to you.
Identify the reason for your debts. If you can easily solve your issues with an organised follow-up system, that’s an easy fix.
Sometimes, sending out a few reminders will solve your debt issue. Now you know how to chase your debts… the right way.
I can help you find some efficient ways to organise your invoice system and your business’ finances. You will be surprised how a little organisation can get your business on the right track. Let’s get in touch below.
Andrew Jeffers
CEO Shuriken
