By Bryan Orr
Imagine walking to the counter of your local grocer and telling the cashier, “Just bill me.” I’m pretty sure you would get a response something like, “Sorry, it doesn’t work that way.” As a business owner, I imagine you wish it was that simple in your type of business to communicate that payment comes at time of service. For many of us, our customers get the benefit of using our products or services BEFORE having to pay for them.
Here are important steps to ensure you actually get paid.
1. Don’t Bill Just Anyone
Many large businesses use a credit application process and credit checks to establish if a company or individual can receive credit or billing terms. While this can be an effective method, many small businesses don’t have the time and manpower to have an in-depth approval process. I advise only giving billing terms to large, established customers that you have some knowledge of, or start on a COD basis and then convert to billing / credit once you have established the relationship.
2. Clarify Agreements Upfront
Making assumptions is a bad idea, ESPECIALLY when getting paid is the topic. Be clear with the terms of payment. If you are offering any discounts and incentives make sure that it is communicated that they only apply for prompt payment. It is a good idea to reinforce payment terms verbally before ending a conversation to eliminate confusion. For example: “I just wanted to clarify that we will need payment within 15 days from delivery. Are we on the same page with that?”
Contrary to popular belief, what was said during the agreement will be more memorable than what is on paper. The paper agreement is there for legal issues, but the verbal agreement is there to strengthen the relational aspect as well as confirm first-hand that there is an understanding.
3. Follow Up
Don’t call or email on the day that payment is due. Contact them a few days BEFORE it is due, as a friendly reminder of the terms of payment. Once a bill is past due, contact the customer every week thereafter reminding them of the terms and making it as easy as possible for them to pay you IMMEDIATELY: “I wanted to remind you that payment was due 30 days after completion; we are now at 37 days. You can either call us or click this link and pay us now via credit card.” Always be polite, but don’t stop following up no matter how annoyed they get.
4. The Power of a Phone Call
If you have a chronic situation where someone either isn’t paying or is always late with payment, the best bet is a candid phone conversation. You want to ask them if you have done anything that is causing the payment issues, if not, just be clear, with a non-threatening tone of voice, that this is affecting your business and the families who rely on your business and that you are requesting immediate payment.
Usually the person on the other end will give you reasons why they have not paid. Listen graciously, but simply reiterate your request to be paid immediately. In some rare cases you may lose a customer, but so long as you remain calm and clear, you will most likely get paid.
What obstacles have you overcome when it comes to billing and credit?