Finding your voice when your client fails to pay
One of the toughest things about running a small contractor company is dealing with non-payment on invoices, says accountancy software provider FreeAgent.
You’ve done the work and you deserve to be paid
Unpaid invoices can cause a big disruption for your cash flow, and as you’re not likely to have a finance department to do the chasing on your behalf, you often find yourself in the awkward position of chasing the same client that you’ve built a relationship with.
It’s very normal to feel awkward about asking for money, but when you’re in business, you’ll need to modify that emotion. Here FreeAgent’s chief accountant Emily Coltman shares her top tips to help you get over the awkwardness:
1. Redefine ‘rude’
It’s easy to feel awkward about chasing an invoice when you feel like you’re the ‘rude’ one - you might have grown up learning that it’s rude to ask people for money, and it’s hard to overrule that instinct. Luckily, you can remind yourself that the rules of the business world are different, and redefine what ‘rude’ means to you - it’s not rude to ask for what’s been agreed upon!
Remind yourself of the following points:
- You have done the work and you are entitled to be paid.
- You are asking for no more than what you are due.
- If you don’t ask, you don’t get.
- It is the customer who is being rude by not paying, not you who is being rude by asking.
Print out this four-point list and pin it up, and refer to it every time you feel yourself hesitating about chasing an invoice. After a while, you will have hopefully redefined “rude”!
2. Have a prepared script
How many half-written emails have you left in your Drafts folder, asking a client to pay you? Sometimes, getting over the awkwardness is as simple as having a prepared script that you can call upon, or even a quick email:
Hi Client Rep,
This is a quick reminder that my invoice, #08, is now due; I’d really appreciate it if you could arrange the payment.
If you’re looking for more ideas, try these late payment letter templates, or even consider another approach – one of our customers used an adorable photo of his son to remind a client that there are real people behind that invoice
3. Set your terms and set expectations
You’ll probably feel a lot more comfortable about chasing a client for late payment if you’ve already talked to them about your terms for invoicing. Before you send your first invoice to a client, highlight to them what your terms are and if there are any penalties for unpaid invoices. If they don’t pay on time, you’re simply reminding them of the terms.
Talking about your terms early on doesn’t have to be a negative or awkward conversation - you could, for example, offer a discount for clients who pay early.
4. Automate away some awkwardness
Some online accounting systems can help with the invoicing process as invoice reminders can be sent automatically when they become overdue. As a provider of such reminders, we can’t promise that they will save you from ever having another awkward conversation, but we definitely think they will help!
Chasing money is an inevitable part of any business, and just overcoming the awkwardness is half the battle to getting the money that’s due to you - hopefully these tips will help you on your way to getting your hard-earned money in that much quicker.
Editor’s Note: Further Reading – How contractors can get paid, if all else fails