Dealing with late payment of invoices - getting over the awkwardness
One of the toughest things about running a small business is dealing with non-payment on invoices - unpaid invoices can cause a big disruption for your cash flow, and because you don’t have a finance department to do the chasing for you, you often find yourself in the awkward position of chasing the same client that you’ve built a relationship with.
It’s very normal to feel awkward about asking for money, but when you’re in business, you’ll need to modify that emotion - here are some tips to help you get over the awkwardness:
It’s easy to feel awkward about chasing an invoice when you feel like you’re the “rude” one - you might have grown up learning that it’s rude to ask people for money, and it’s hard to overrule that instinct. Luckily, you can remind yourself that the rules of the business world are different, and re-define what “rude” means for you - it’s not rude to ask for what’s been agreed upon!
Remind yourself of the following points:
- You have done the work and you are entitled to be paid.
- You are asking for no more than what you are due.
- If you don’t ask, you don’t get.
- It is the customer who is being rude by not paying, not you who is being rude by asking.
Print out that list and pin it up, and refer to it every time you feel yourself hesitating about chasing an invoice. After a while, you will have hopefully redefined “rude”!
Have a prepared script
How many half-written emails have you left in your Drafts folder, asking a client to pay you? Sometimes, getting over the awkwardness is as simple as having a prepared script that you can call upon. You don’t need to start from scratch - FreeAgent customer Fiona has shared her own reminder email wording on her blog:
This is a quick reminder that my invoice, #27, is now due; I’d really appreciate it if you could arrange the payment.
If you’re looking for more ideas, try another FreeAgent customer’s approach - Cole used an adorable photo of his son to remind clients that there are real people behind that invoice.
Set your terms and set expectations
You’ll probably feel a lot more comfortable about chasing a client for late payments if you’ve already talked to them about your terms for invoicing. Before you send your first invoice to a client, highlight to them what your terms are and if there are any penalties for unpaid invoices. If they don’t pay on time, you’re simply reminding them of the terms.
Talking about your terms early on doesn’t have to be a negative or awkward conversation - you could, for example, offer a discount for clients who pay early. Check out this blog post and comments to see some examples of how other small business owners manage their terms and unpaid invoices.
Automate away some awkwardness
The great thing about FreeAgent’s automatic invoice reminders is that you can write your unpaid invoice reminder email, then set FreeAgent to send it automatically when an invoice becomes overdue. We can’t promise that it will save you from ever having another awkward conversation, but we definitely think it will help!
Chasing money is an inevitable part of any business, and just overcoming the awkwardness is half the battle to getting the money that’s due to you - hopefully these tips will help you on your way to getting your hard-earned money in that much quicker!
- FreeAgent integrates with EdgeDocs
- Budget 2015: is the end in sight for Self Assessment?
- A new way to explain your bank statements
- Five pro tips to help you get the most out of FreeAgent
- We wrote love songs for our customers this Valentine's day - here are five of our favourites
I'm getting really into using the time tracking on @freeagent - makes life so much simplr http://t.co/ESJucTtTO1
Death of the tax return: The software view @freeagent @taxcalc @BASDAUK @Xero @BTCSoftwareUK @DigitaTRTA http://t.co/rD4TC8qXOU
Very grateful for the amazing support from @freeagent for our startups. Thank you!
@jessvallance1 @freeagent I'm a freelancer and I fully endorse this post.
Tell you what, freelancer friends, @freeagent is a proper handy bit of kit. Especially once you go Ltd.