The inconvenience of following up when customers haven’t paid you on time can be frustrating and can mean less time to focus on other business priorities. Saving time and avoiding cash management problems is a serious concern of business owners when they extend credit to their customers.
A recent report suggests that invoices are paid late 60 percent of the time. More than a third of small and medium-sized firms believe they are negatively affected by late payments, which can have an impact on suppliers, employees, and financial investments.
As a business owner, it’s important that you learn how to be proactive about reminding customers to pay. This will help to prevent a large portion of the awkward, uncomfortable, and potentially frustrating interactions that can occur when a customer doesn’t pay on time. Keeping a few best practices in mind will help in asking for payment when it’s most beneficial for your business, without coming off as annoying or desperate.
In this blog, we compare the various channels you can use to follow up on customer invoice payments such as email, SMS text payment reminders, and collections phone calls. We explore the strengths and weaknesses of each channel of payment follow-up, and when certain channels can be more useful in your specific payment follow-up situation.
First things first: be polite, be courteous, be professional
Whatever channels you utilise to follow up on late payments - always stay polite and professional in your invoice reminders.
It can be extremely frustrating when your business doesn't get paid on time. This can cause major financial problems and make it difficult to keep your business afloat. Businesses must receive what they are owed. When it comes to late or overdue payments, it pays to be polite and professional in your reminders— it maintains your great customer relationships and your reputation in the industry, and you avoid risks if the other party becomes defensive or combative.
Keep these few points in mind when you have to ask for payments:
- Initiate efficient invoicing communication as soon as the invoice is issued.
- Clarify your point of contact, and provide any relevant payment information.
- Confirm your payment terms and invoice details, and ensure they have all the information they need to approve and pay on time.
- Ensure that payment reminders are sent before the due date.
- You may additionally ask your customer to confirm receipt of the email and inform you of any anticipated payment delays.
- And above everything else — Be polite and professional in your communication. Accord your customers with respect, and they will reciprocate the sentiment.
Here is one example of how to strike a polite and a professional tone in your payment reminders:
Subject Line: Upcoming payment reminder from {your business name} for invoice {invoice number}
Dear {first name},
Thank you for choosing {your business name}.
I am writing to confirm your charge of {invoice amount} which will be invoiced on {invoice date}. If you put me in contact with your accounts payable team, I would be happy to ensure they directly receive a copy of the invoice for timely resolution of payment.
If there are any further details you require or changes you wish to request, please don’t hesitate to contact me at {phone number}.
It is my pleasure to work with you and I appreciate you taking the time to confirm receipt of this message and letting us know in advance of any anticipated payment delays.
Kind Regards,
{Sender first name}
Continue to follow up until payment is received, you can make use of these 6 polite invoice reminder templates for email. Now, onto the best methods for how to ask customers for payment.
Via email: Best for providing detail and documents
When it comes to asking customers for money, email is one of the most efficient ways of doing so. It is a quick and painless way to communicate with your customers. Email also allows you to be more personal with your message. You can easily include detail, attach an invoice copy, customer statements, or link customers to a payment gateway to make instant payments. Emails are an easy way to ensure your customer receives all relevant information and documentation within one message, to pay your invoice instantly as soon as your reminder hits their inbox.
Effective invoicing communication via email must begin as soon as your invoice is issued. You can also kindly ask your customer to confirm receipt of the email and share any anticipated payment delays in advance in your before-due payment reminder email.
However, when there are complex or sensitive issues to resolve surrounding a payment, or your customer relationship is on the line over an unsettled debt - there can be better-suited means for contacting your customer, such as accounts receivables phone calls.
Best practices for sending payment reminders over emails:
- Emails must have a clear and concise subject line.
- Include your business name and the invoice number in the Subject line. This helps with encouraging the customer to flag it or find it easily when they want to.
- Open your email with pleasantries.
- Include a polite reminder of the invoice number, the amount owed, and the due date.
- Conclude with expressing gratitude for their continued business and for their timely payments.
- Don’t forget to attach a copy of the invoice with the email.
Furthermore, emails can be used within automated accounts receivables software to minimize the time spent following up on late payments, reduce human errors and increase operational efficiency.
When used correctly, email is an effective tool to ask customers for payments and can help you speed up the payment process. They let you attach all the detail and documentation that your customer might need in one message, and are an accessible means of communication utilized by most businesses today.
Via SMS texts: best for reaching customers quickly
SMS payment reminders are an efficient tool to quickly remind customers about upcoming or overdue payments that get your message across quickly, and allow you to reach customers whilst they’re on the go. SMS messages have an open rate of 98% (Tyntec), so are the most likely method of payment follow up to get noticed, and read.
By pairing your SMS payment reminders with a payment gateway and including a link to pay, you can allow customers to pay their invoice instantly from their phone - reducing barriers to payment and increasing your chances of prompt payments. Following best practices can ensure you get the most out of your SMS payment reminder texts and get your payment reminders via text noticed, and sent to the right place.
SMS payment reminders are perfect for sending a fast, effective nudge to customers to get that invoice payment across the line. However, when more detail and information is required that particular customer to complete their payment, methods like email payment reminders can be more effective.
Best practices for sending payment reminders over SMS:
- Ensure you have got the right number, and that the number belongs to the right person. The last thing you want is to mix up your numbers and send a wrong payment reminder to the wrong person.
- Always personalize your SMS reminders and include the customer’s name, invoice number, and the amount due. This helps establish a personal connection and increases your chances of receiving early payments.
- Include payment portal links in your SMS reminders. This will give the customers an option to pay their invoices quickly and immediately.
Here is a short and sweet template for sending payment reminders over SMS and texts to your customers:
Dear [FIRST NAME]
Your invoice for [amount] is due by [due date]. Please click [payment URL], call us on [your phone number] or email us to pay.
[Your business name]
Follow up on late payments via SMS with these five pre-made payment reminder text samples.
Over the phone: Best for issue resolution
Phone calls are best when you have to resolve any disputes with the customer — whether that’s over the amount you asked for or the timing of the payment. When you ask for payment through a phone call, you’re able to gauge the customer’s reaction and make adjustments if necessary.
Accounts receivables phone calls also allow a more personal approach than other means of payment follow ups. They can help you understand issues more clearly, resolve them with tact and sensitivity, and are an excellent tool to build positive long-term customer relationships.
Email and SMS reminders are usually sufficient to nudge your clients into paying their past-due invoices, but in some cases, a phone call can be necessary. Here are some common instances where it's better to pick up the phone:
- If you've sent your customer three emails requesting payment and haven't received an suitable answer, it's time to call.
- If you haven't gotten a response after the SMS reminders sent via text – call your customer. Phone calls aren't as easy to ignore.
- Before sending a letter of demand or persuing debt collections, it's best to make customers aware of your next steps over the phone and your reasons for doing so, and to give them a chance to resolve this before taking more serious action.
However, accounts receivables phone calls require a high time-input for your finance team. They involve preparation, lengthy conversations, and research to ensure the correct payment contact is reached over the phone. Therefore, payment follow ups over the phone are recommended when other, more efficient means of follow ups such as email and SMS have proven ineffective after multiple attempts. This helps you utilize the effectiveness of phone calls only when they are necessary, and lets you adopt more operationally efficient payment follow up methods as a standard.
Best practices for talking over the phone
Our 10 conversation scripts to get invoices paid over the phone will have you covered when you are on the call with customers. Ahead of the payment follow up phone call, there are certain steps you should take to prepare:
- Ensure that your invoice information is correctly tracked and updated. You don't want to waste your time making a phone call to a customer who has already paid.
- Keep your cool and your head in the game. Late payments are a sensitive subject, especially if your company's financial health is on the line. But if you are levelheaded and polite, a successful resolution of the payment dispute will be more likely.
- Have all the important information available to you before the call, so you can avoid any confusion. Have the invoice handy which should include invoice number, the product or service the invoice is rendered against, the invoice date and the due date. Any relevant information must be in your hand before you sit down to place the call.
Via posted letter: Best for formality and urgency
While emails and SMS payment reminders provide a speedier delivery method, some people believe they lack the same sense of professionalism that letters provide. Many—perhaps older—customers regard a letter as having more "importance" than an email, owing to the fact that we receive significantly fewer letters these days. In some countries, corporations threatening legal action over outstanding bills may be required to contact via letter rather than email.
There is also a chance that if you send a consumer an email, it will be one of many they receive that day. As many of us have busy inboxes, letters can have a higher chance of getting noticed and read. So when taking serious steps such as threatening legal action, its advisable to send these communications via posted letters.
Email reminders come in quite handy, of course, for the consumers who do have internet connection. It’s just as likely that some of your clients do not have access to email, particularly if they conduct business largely without use of a computer (e.g. farmers, builders), live in a rural area or an area with limited internet access.
When delivering a reminder through letter, use a formal tone and language to emphasize the gravity of the matter. You can also explain the ramifications of late payment. See how to write a posted letter for outstanding debt.
Best practices for sending posted letters
When a customer's payment is significantly overdue, you will have to send them a “formal letter” to notify them of imminent debt collection or legal action. It’s vital that you use a formal tone and wording when sending a reminder through email or letter and explain the consequences of a late payment or a non-payment.
- When writing a formal letter of demand, you should provide the facts in an objective manner, without resorting to theatric. Keep it formal and thoroughly professional.
- Include accurate information about the defaulting customer such as their address, contact details, etc. Also include the past due date, the amount owed, and the number of payment reminders or notices sent.
- Briefly outline the course of action you will be forced to take if the customer doesn't clear their dues. Be direct about pursuing a legal course of action.
- Attach copies of the invoice, a statement of account or any other document pertinent to the matter.
Use a service provider or outsource
Asking customers for money can feel awkward - even though you are simply asking for when you are owed. But when you don’t chase payments, you leave money on the table and can negatively impact your business’ cash flow. You also miss out on the opportunity to improve your operations and build stronger relationships with your customers.
Hence, outsourcing your accounts receivables or letting a third party take care of the debt collection of dues is a beneficial option for many businesses. You can avoid the awkwardness that comes along with asking customers for payments, and focus more time on maintaining great relationships with your customers - and growing your business.
It’s best to outsource your credit control and collection of dues if:
- You have lots of unpaid invoices, or payments generally come in late.
- You are writing off debts.
- You are constantly invoicing late and forget to, or put off sending payment reminders
- You don’t have an in-house team or a dedicated employee to monitor, track, and pursue outstanding invoices.
- You lack the necessary tools or experience to track your invoices.
- You don’t have a fine-tuned credit control policy in place.
Outsourcing the task of collecting or following up on outstanding invoices will not only ensure that payments come in on time but will also let you focus on growing your business and scaling up your operations - as seen in businesses like Huttie Group and Glaze Digital.
How should your business ask customers for payments?
There is no right or wrong method to ask a customer to pay their invoices—but there will often be one that may be more appropriate than the others. Which method you should use to send payment reminders depends on where in the collection cycle you are. Emails and SMS are the most effective and efficient means for sending the first few payment reminders to customers.
Following this, implement accounts receivables phone calls to address any issues that may be holding up payments. Finally, if debts are still not paid consider including a postal letter as part of the collections process.
Automatically ask customers for payments without losing the personal touch
However, there is a way to avoid all the hassle and time that gets spent following up on late payments via multiple channels. Chaser’s accounts receivables automation software lets you follow up on payments automatically, without losing the personal touch.
Automatically send customised email and SMS payment reminders according to schedules that you choose - to target customers via the best channels, at the right time. Chaser also logs payment requests and call notes in the built-in receivables CRM to track progress on payments and track all payment data in one place automatically, including customer replies. Businesses like yours are getting paid 54 days faster and saving over 15 hours per week on accounts receivables tasks.
Get invoices paid faster automatically and save time with Chaser, with a 14 day free trial.
