Outstanding invoices are the scourge of every small business owner, and are even more troubling for accountants who are always pressing their clients to monitor their receivables. Many firm owners don't want to spend their time and energy on phone calls and e-mails to customers about payment, but some steps can be taken before an invoice is overdue that can lead to effective collections.
Accounting software products such as Intuit's Quickbooks Billing Solutions offer efficient and effective invoicing tools. Intuit's program requires just a couple of click to send your invoice to a professional mailing service that prints and mails your invoice, typically the next business day.
Once the invoicing is complete, easing your clients' abilities to pay can reduce the time and resources your firm expends on collections.
Quickbooks Billing Solutions makes paying invoices easier by allowing an on-line customer service function that gives your clients access to their own personalized and pass-word protected Web page where they can pay invoices, view billing history, print invoices and submit inquiries.
Another approach to collections occurs before your services are even rendered. Some practice owners find that the customer is more likely to pay on time if payment terms are made clear in contracts before work begins. Many also require large deposits or up-front retainer fees in order to help with their cash flow.
Gini Dietrich, owner of a Chicago-based public relations firm, instituted a two months' up-front retainer fee because her cash flow was so poor that she came close to going out of business, timesargus.com reports. âI wasn't very good at asking for the money,â Dietrich said.
Even when businesses specify payment terms on their invoices and spell out progress payment dates for ongoing work in their original contracts, some customers will still take their time paying and the phone call becomes necessary.
It's important to make that call both effective and friendly to avoid damage to the relationship, Michelle Dunn says, writing for entrepreneur.com.
Confidence is the key to success in making those calls about late payments Dunn says. When making these calls, she recommends that the caller:
Smile â Come up with a greeting that is pleasant and projects confidence. The customer or client is not likely to want to discuss the overdue payment and is not likely to respond to a dull or boring message.
Speak Up - Imagine that the person is sitting opposite you and speak in a clear but not loud tone.
Focus - Keep your own attention on the subject of the call. Don't allow yourself to be distracted.
Relax - Sit up straight, Dunn says and don't play with paper clips or pens when you are making the call. Use your face, voice and posture to convey confidence.
It's important to document all collection calls, Dunn adds, and to observe the requirements of the Fair Debt Collection Practices Act (FDCPA), which says when you can and cannot call a debtor. Calls may be made Monday through Saturday from 8 a.m. until 9 p.m. and on Sunday if there has been no response during the week.