The 4 most effective email templates to follow up on outstanding invoices
Email is an incredibly effective tool for credit control. Here at Chaser, we’ve seen that ...
Get up to date on the latest credit control insights and find out what's been happening at Chaser.
Chaser needs the contact information you provide to us to contact you about our products and services. You may unsubscribe from these communications at any time. For information on how to unsubscribe, as well as our privacy practices and commitment to protecting your privacy, please review our privacy policy.
Small businesses and startups can be likened to those sheep that spend their days on the outside of the herd. They are vulnerable and easy prey for the host of calamities that can befall a new or small business.
When you don’t have deep pockets to carry errant customer debt, and your ability to feed your family and pay the rent is reliant on just a few accounts, it becomes apparent how critical debt recovery is.
We’ve spoken at length about the importance of effective credit control practices and all the checks and balances that should be in place. But over and above that, there are dozens of ways that debt recovery for small businesses can be made just a little more manageable and efficient.
Here are a few that you can put into practice right away to get those outstanding payments rolling in.
One of the great things about automating functions, especially in the field of accounting, is that it tends to be less personal. Nobody likes asking for money, and it takes a special kind of person to choose a career in debt collection!
However, setting up your processes to include the automatic generation and sending of customer statements does two things. Firstly, it saves you doing this stuff manually where mistakes can be made and your valuable time is wasted. And secondly, your system is initiating the payment conversation with your customers. It’s hard to be snarky with a computer-generated statement, you must agree.
Auto-generated messages can be set up for all your customers and linked into your accounting system guaranteeing accurate, time-sensitive follow-ups on any channel that you choose; email, SMS, or WhatsApp. What could be easier than that?
Granted, this won’t solve all the debt collection problems, but it’s a great start.
It may seem counterintuitive, but there is data to suggest that a customer-oriented approach to debt collection works. Essentially, we put the power of debt payment and platform choice before the customer and place perceived control in their hands.
An article from Forbes, Four Keys Of A Successful Debt Collection Strategy says, in part, “Customer-oriented operations focus on making payments easy, efficient and secure for customers (debtors).
“With the rise of smartphones and apps, debt collection agencies should consider accepting or using app-based payment methods alongside web-based methods. Self-service portals such as online payments, payment apps and automated phone calls can allow for secure and easy collections. I’ve found that when a debtor has an easier time making payments, they are usually more willing to work out a payment plan.”
This DIY approach to debt collection may well work for your small business, resulting in another cog in the debt collections wheel that you don’t have to concern yourself with.
We all understand how our choice of words and tone can affect the way a person responds to us. (If not, run this by your spouse.) This factor is just as vital when communicating with your debtors.
The Psychology of Debt Collection written by Nobel Prize winner Richard Thale makes some valuable points.
“It’s understood that language can have a dramatic positive influence on people’s behaviour. The Behavioural Insights Team in Australia found that active wording like “you owe” rather than “amount owed” led to significant improvements in payment rates.
“In the UK, a change in the wording of the letter sent to those who failed to pay their taxes on time increased payments by more than five percentage points. Instead of a threat, “You are currently in the small minority of people who have not paid their taxes on time” worked best.”
Small changes such as those mentioned above, alongside a professional credit control system and a firm yet reasonable tone lay the foundation for great results and happier customers.
With debt collection being such a universally distasteful task, it’s too easy to enter into a call with an aggressive or confrontational tone. Small businesses can’t afford to upset good customers. Therefore, it’s a smart idea to presume that they forgot or to offer assistance in gathering the information they may be missing to make payment. This mindset will be evident in your tone and is less likely to upset or offend someone who has a genuine reason for late payment.
Thereafter, you have the option to be more assertive in your communication, while never crossing the line into rude or unprofessional.
Have you lost all hope that this customer is going to pay? Is their account way overdue and nothing seems to be working? Even at this point, many SMEs are hesitant to call in debt collection agencies. However, it’s worth doing the maths on how long you spend chasing this client, what their overdue account is costing you, and if you really want delinquent clients like this anyway.
Will you lose the customer if you hand them over? Perhaps. But you may also get your money back and learn a valuable lesson in vetting potential clients that you intend to extend credit to.
Don’t be too hasty though. As we’ve highlighted above, there may be a genuine reason that a previously great client is late in paying their account so it would be wise to find a healthy balance that works for your business.
There are stringent laws governing how businesses are allowed to deal with customers, including:
These laws authorise businesses to pursue payment, but they also have firm boundaries which exclude aggressive collection tactics and unethical behaviour.
If you’ve read through this information and you’re still concerned about your ability to collect payments effectively, then we can assist. Whether you prefer to automate your credit control systems, or simply hand over the entire debt recovery process to a team of dedicated professionals, you’re in the right place.
Please feel free to contact our friendly team for a free demo or ask all the questions you need answers to, in order to make the best decision for your SME.
Email is an incredibly effective tool for credit control. Here at Chaser, we’ve seen that ...
Overdue payments can cause challenges for businesses and deeply affect cash flow. If your incoming...
The invoice is the final step in a well-executed business transaction. It's at this point that both...