One in every ten invoices in the UK is paid late and the sad fact is that these late payments disproportionately impact small and medium enterprises (SMEs). SMEs in the UK are currently owed around £50 billion in unpaid invoices and the impact of these late payments can be disastrous. Cash flow is the lifeblood of the small business and having it cut off by unpaid invoices leads to around 90 per cent of SME liquidations.
As a cloud credit control leader with over eight years of experience in the field, Chaser has helped thousands of small businesses tackle the issue of late payments. Our automated payment reminders have helped our users collect around 80 per cent of their outstanding invoices and get them paid, on average 16 days sooner.
Chaser's award-winning automated cloud-based platform also saves our users around 15 hours weekly on credit control management tasks. While automated email chasing using our effective email templates will get you most of the way there, there's no getting around the fact that sometimes you'll have to pick up the phone and ask for payment. Chaser has already advised on avoiding difficult conversations with customers on overdue invoices. However, if you need to follow up with a phone call, here are six of our most tried and tested effective scripts for credit control phone calls.
As mentioned above, our automated payment reminders are normally enough to prod your customers into making good on their outstanding invoices and obeying payment terms, but certain situations require a phone call.
Ground rules for chasing customers for overdue payments
If you have overdue invoices and outstanding payments, here are some instructions for how to respond to clients:
- You don't get a detailed response to your payment request email chasers - If you've sent your customer three email chasers about the payment deadline and have not received a satisfactory response for why the payment is late or given you a date to expect payment by, it's time to pick up the phone. Payment request email templates aren't always 100% effective, particularly if they go to spam email folders or administrative staff miss them.
- You don't get any response at all - If, after you've chased your outstanding invoice three times, you've not received any response at all, you'll need to phone your customer. Some people are inclined to ignore a payment reminder email, it's much harder to ignore someone on the other end of the phone. When speaking on the phone, always ask for payment politely. Don't attack a customer over an overdue payment or unpaid invoice – that might be why they are avoiding you. And don't immediately mention your collection agency. You want to start on a positive note, following up your polite reminders and giving the person responsible the benefit of the doubt.
- You need to escalate the situation - If the situation has degraded to the point where you need to threaten legal action, it's best to emphasise the reality of the situation with a phone call and send your customer the same information in writing. While Chaser offers a new take on debt collections that emphasises mediation and maintains positive customer relationships over harassment and aggression, it is always better to try and resolve the situation and get payment from clients before debt collection becomes necessary.
When tackling overdue payments, always look for alternative solutions that don't require immediately taking the person to court or using conventional debt collection agency services. For instance, you might suggest a payment plan that spreads the cost over several months after project completion. You could also change the due date if you have evidence the customer will receive additional payments from their clients in the near future.
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How to prepare to request payment effectively over the phone
While the conversation scripts Chaser has pulled together will help you once you're on the call, there are some things you can do to prepare yourself for the call in advance to make it more likely you will collect overdue payments.
- Make sure your information is correct and up to date - The last thing you want to be doing is making a phone call to chase an invoice that's already been paid. Using Chaser's centralised hub is an excellent way to track invoices and payments in a way that's easy to understand at a glance. It tells you the due date of the late payment, the invoice number, and various payment details that help you get your story straight.
- Remain polite and focused - Late payments are an emotive issue, especially when the future of your company is tied to your cash flow. However, getting a positive result from a credit card control phone call is more likely if you remain calm, polite, and focused on getting results. There's also a cringe factor, so Chaser has put together some tips on how to deal with late payments without the cringe factor. In general, always have the payment due date to hand and know how you will approach each particular client, based on your experience with them so far. Avoid the temptation to threaten late fees – at least not at first. Doing this can sometimes discourage customers from working with you to find a solution, and it's one of the big reasons small businesses loose customers.
- Have the right information to hand - To avoid any risk of confusion, you should have all the relevant details available to hand before the call, including:
- The correct invoice number.
- What goods or services the invoice is in relation to
- The payment terms
- Invoice issue date and stated payment date.
- The number of days the invoice is overdue.
- The time and date of any previous email reminders you've sent.
- Notes of any communications so far.
- Information on who to talk to about your outstanding invoice (if you don't know, ask for Accounts Payable).
- Your protocol for payment options
- The contact details of the person who bought from you (the decision-maker)
- The late fee and any additional fees
When you call your customers, understand, empathise, and negotiate with them. If you are too aggressive, you'll immediately put the other person on the defensive and make it harder to solve the problem. The last thing you want is to drag yourself and everyone else through a long court process.
Phone call scripts to ask for payment
To make things as easy for you as possible, Chaser has written six scripts that you can use to deal with six of the most common excuses for late payment. Here they are in full:
----If the customer forgot to pay----
Customer: My apologies, I've been really busy and forgot to pay.
You: Thank you, I fully understand that can happen. Now I have you on the phone, are you in a position to make a payment now?
Customer: I'm a little tied up right now, I'll do it today or tomorrow at the latest.
You: Not a problem, I've made a note in my system to reflect the promised payment and we look forward to receiving it. Have a great day.
----If the customer believes the original invoice is incorrect----
Customer: I've not yet paid as the invoice is incorrect.
You: I'm very sorry to hear that, could you please explain what the problem is?
Customer: (Explains issue)
---- If the customer is correct ----
You: Apologies and thank you for explaining, I'll have that looked into right away. I'll issue an updated invoice as soon as this has been resolved. I'll be back in touch shortly.
---- If the customer has misunderstood ----
You: Thank you for explaining. However, there seems to have been a misunderstanding. (Explain the misunderstanding).
We'll endeavour to make this more clear in future, however for now this invoice remains overdue. Let me know if there's anything I can do to help facilitate payment.
---- If the customer hasn't received an overdue payment request before----
Customer: This is the first time I've received this invoice.
You: Apologies if that is the case. Could you please confirm that your email address for payment is > customer email address here<?
Customer: Yes, that is correct.
You: Great, thanks for clarifying. We have sent emails regarding the payment of this invoice to that address, and they are all sent with an invoice copy attached. The emails were sent on >insert times and dates here<
So please do check your spam in case they've gone in there by mistake. With regards to this invoice, are you able to settle it now over the phone?
---- If the customer has lost access to their card----
Customer: No, sorry, I don't have access to my card. I'll put it on this Friday's run by BACS.
You: Brilliant, I'll make a note in our system to ask for payment by Tuesday when the BACS payment clears. Thank you for your time.
---- If the customer can't get approval from a senior team member----
Customer: I know the invoice is two weeks past due. Unfortunately, the original invoice has not yet been approved by my director.
You: Sorry to hear that, I appreciate that these things are sometimes out of your control. Has there been a query with the invoice for it to be left unapproved?
Customer: Not to my knowledge, no.
You: In that case, is it possible to request that it be approved today? The invoice is now overdue according to the payment terms. If your director has any queries at all about the overdue invoice or payment due date, feel free to have her contact me by phone or email.
Customer: She's not in the office right now but I'll do my best to reach her.
You: Thank you, I appreciate that. I'll check back in with you soon. All the best.
---- If the customer isn't in the office to make a payment----
Customer: I'm not in the office right now so I can't make payment.
You: Not a problem, I understand you must be busy. We can accept card payments over the phone if that would make things easier.
Customer: No, sorry, I'm driving. I should be back in the office tomorrow. I'll make a secure payment then.
You: Thanks for that, we really appreciate it. I'll make a note on our system to expect payment then. Have a nice day.
---- If the customer says they already paid the original invoice----
Customer: Why are you calling me? I've already paid for this invoice!
You: My apologies, I'll check our system and see why this wasn't marked as paid and make sure it doesn't happen in future. Do you know when this was paid?
Customer: Sometime last week, I believe.
You: Thank you, I'll look into this right away for you. I'm sorry to disturb you. Have a nice day.
While our call scripts are a great way to overcome the six most common excuses for non-payment and move towards getting the situation resolved, having effective credit control in place is normally the best way to avoid late payments. Small businesses with free cash issues can make taking payment on time more challenging.
7 tips for getting paid faster and asking for payment professionally
Calling clients and customers to ask for payment always feels awkward, so most businesses avoid it or get a collections agency to do it on their behalf. However, it is essential for getting paid faster. Asking for payment professionally can mean the difference between your business thriving or failing.
Here are some tips for getting paid quicker and asking for payment professionally. Following these makes it more likely you will receive payment without relying on threats or aggression.
Review your payment terms with your clients
Don't assume that your customers and clients will review your payment terms or keep precise records of the due date when they get home or back to the office. Most won't. Therefore, always run through payment information with them before selling anything.
Late payment from clients usually happens because they either forget they owe you money or have the wrong date in their minds. Taking time to explain your terms, how to pay, and the payment due date ends any ambiguity.
Ask for payment upfront
Another strategy is to get clients to pay you immediately instead of waiting for them to remember to do it. Asking for money upfront or putting them on a subscription service that automatically renews prevents you from having to chase them up when they go a day overdue.
Send professional and polite reminders
If you can't do that, send a professional payment request email about the overdue payment. Keep reminding customers that they need to pay you and that you want to avoid taking further action.
When you ask for payment politely, it reminds clients that there are real people behind your company and that non-payments have damaging effects. Don't immediately threaten late fees because it might discourage them from booking you for future work. Always ask for payment professionally.
Usually, customers forget payment deadlines and need a friendly reminder to nudge them to send you money. However, reminders also warn clients who are avoiding payment deliberately.
Offer more payment options
Another strategy is to offer clients multiple payment options. Some customers might have more money in an e-wallet than a checking account, so billing them through this channel might be the better option. You can also offer them credit to pay large bills using a third-party company, helping them spread the cost over several weeks or months.
Set a clear deadline
While it is essential to remain professional in invoice emails and phone calls, you should also set clear deadlines, telling clients when you expect to pay them.
Each deadline should have a consequence linked with it, such as raising the late fee, contacting a collection agency, or telling them you are exploring legal options.
However, you still want to state in friendly terms. Don't be aggressive in your communications. Explain your policy and the actions that you have to take. Don't do anything that might jeopardise future work.
Automate reminders
You can also increase the chances of getting money faster by automating reminders. Using software to send a follow-up email and request payment every few days helps to keep it top-of-mind for your customers.
Make sure you avoid sending overdue payment requests to the wrong person. Check that the recipient has real decision-making capacity and can pay you.
Include all the elements of a professional payment reminder email
Finally, ensure you include all the elements of a professional payment reminder, including a subject line, friendly reminder script, secure payment facilities and information on late fees. Make it straightforward to collect payment from clients, including providing links to payment services, or using digital invoices with payment functionality built in.
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Getting help with asking for payments over the phone
Sending a payment request email is easy because it is so impersonal. You don't have to communicate with the person who owes you money directly.
Doing the same over the phone is always more challenging, but it is also more effective. Calling your late-paying customers and clients encourages faster payment and avoids having to explore unpleasant legal options.
For more information on how to optimise your accounts receivable processes, and put an end to late and inconsistent customer payments as a small business owner, download Chaser's ultimate guide to accounts receivable.
