Challenge Collections is a Brisbane based debt recovery business. We help businesses of all sizes and sole traders to successfully recover funds they are owed by debtors. So it may seem odd that we are handing out free tips about how to collect your own debts!
But we are also a business, and we understand that the point of being in business is not to chase debts but to run or manage your business and enjoy what you do. So if we can make collecting your debts just a little easier with some tried and tested tips that we’ve picked up over the years, that’s a win-win for everyone.
Parting with money isn’t anyones favourite thing to do, but when it comes to invoicing, manners go a long way to getting you paid. Research has shown that simply including the words “please” and “thank you” on your invoices increases your chances of getting paid.
Simple, quick and free to implement, there is literally nothing to lose!
While customising an invoice might sound odd, you can think of it as an extension of your customer service. Clients and customers have different needs. If you take the time to ask them what they need on an invoice, you are showing them that you actually care about their business even after the job is done.
It can also be a time saver down the track when you don’t have to re-issue invoices with extra information that some customers may ask for.
Much like adding please and thank you, invoices with specific time frames measured in days are more likely to result in prompt payment. Some accounting software and invoicing programs use terms like “net 45” to signify a bill that is due in 45 days, so where you can, change this to include the word “days”.
Days also works better than “due on receipt” since that phrase doesn’t give a firm due date on the calendar if the funds are not immediately available.
Put simply, incentives work. It is the reason we drive past a petrol station to fill up at the one down the road, because we have a four cent per litre fuel voucher in our wallets.
Set an “early” time frame with your invoices and consider applying a 1% – 5% discount for early payment. The customer feels like they’ve earned a discount and you get up-front cash flow earlier than you might otherwise.
… And the Stick
Of course, penalties work as well, otherwise library books or DVD’s would never get returned. If you can, mention late payment fees in the initial contract, and again on the invoice. Banks, phone companies, and utility providers all do this, so there is no need to feel uneasy about it.
From a clients point of view, if the choice is between paying the bill that attracts a late payment fee versus one that doesn’t, which do you think they will deal with first?
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No single one of these strategies is a sure fire way to get all your bills paid on time, every time. But apply them together, and consistently, and you will greatly increase your chances of collecting your accounts payable in a timely fashion.
And of course, when that doesn’t work out, Challenge Collections are ready to help you with professional, and friendly service from an experienced local team.