I don’t know of a business that is happy to wait for payment after completion of a job. The following are meant to be suggestions on how to get paid for your work sooner, rather than later. It isn’t rude to insist that a customer live up to expectations for payment. After all, they expected you to live up to theirs in terms of promptness and quality of performance.
1. Don’t delay the first phone call to the customer.
Call on Day 31 of 30 day Terms, especially with a new customer or one that tends to pay slowly. A reminder that you are expecting payment in short order should have the desired result.
2. Call the Accounts Payable Clerk rather than the C.F.O.
Have the A/P Clerk transfer you upward internally to discuss payment, rather than the other way around. The C.F.O. or President of the company might transfer you to the A/P Clerk to extend their time to pay. However, calling the A/P Clerk with a firm demand can help. They will listen to you and, if you get your message across, will alert their boss to the pressing situation.
3. Ask for your money, as a matter of right.
Don’t apologize for demanding what is yours. It isn’t necessary to spew fire during the telephone call, but it is imperative to get the message across that you will not be put off further.
4. Get credit card information as part of your customer order system.
There are advantages to giving away a percentage of the sale. You get your money immediately and the customer still gets terms to pay. Asking for credit card information as part of your credit granting process has the positive effect of weeding out the bad customers who aren’t serious about paying.
5. Make sure your invoices are correct and complete.
If you eliminate confusion, you eliminate reasons for delay in payment. Is your company name and remittance address clearly shown on your invoice? Is your invoice number, clearly shown on the bill? Is the customer’s Purchase Order number on the invoice? Finally, is there a full description of the work performed or goods sold stated?
6. Put Terms and Conditions on your quotes and contracts.
Clearly defining the rights and responsibilities of each party helps to speed payment. If you include Terms which include a penalty for late payment (finance charges) and an ability to recover attorney fees from the customer in the event of a default, you will probably never collect either one because you will have received timely payment. Another way to speed payment is to include Terms which provides for an incentive for early payment.
7. Understand your Customer’s Payment Cycle.
If they issue checks on a fixed day of the month, time your invoice to arrive a few days prior to checks being cut. Invoices at the top of the pile might get paid first.
8. Invoice in the “Customer’s Format”.
Larger companies dictate how the invoice should look Not invoicing properly might delay payment.
9. Add payment options.
There has been a move in the credit and collections community to embrace alternatives to traditional check writing. Obvious choices here would be credit cards and PayPal methods of remittance. Some companies have established online processing of payments. Do you have a in-house credit card terminal? Let your customer know that.
10. Get a Down-Payment or a Deposit for a new customer.
Maybe for the first order and/or before the customer establishes credit-worthiness, it might be prudent to get paid something ahead of commencement of the project.
11. Get Invoices Out Faster.
Invoice at Stages of the Project, not at the end of the month or end of the contract. Billing in stages helps your cash flow and stops “sticker shock” when the project or job is completed.
12. Know Your Customer’s Stress Points.
If you are making a specialty part for that customer and aren’t getting paid, stop production and let the customer know why. If the customer values the quality of your services, they will find a way to get you paid to keep their own production line going..
13. Revoke Credit Privileges if the Customer Defaults.
Only good customers should receive the benefit of flexible credit terms. The consequence of any default in payment should be pointed out to the customer if it occurs. If they fail to cure the default in payment, they should not be afforded new open credit terms.
14. Pick up the Check at the Customer’s Place of Business.
Why accept the delay of mailing via the U.S. Post Office? If your customer is “local”, there is nothing wrong with contacting them with a date and time that you will come to their office to collect their overdue payment. Why permit the customer to further stall by promising to make the payment by mail whenever they feel like mailing the check?
You may have a long personal relationship with principal of your debtor, but nothing makes strangers of friends faster than a debt owed. If you can’t get paid yourself, consider referring the claim to a debt collection professional.
Prepared by:
Elliott M. Portman
Portman Law Group, P.C.
Counsel to Rosenthal & Goldhaber, P.C.
1393 Veterans Memorial Highway; Suite 212N
Hauppauge, NY 11788
(631)979-8500