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Get paid faster – debtor management tips

How to get paid faster and keep your clients

We manage debtors for many of our clients, we have even managed international and foreign debtors,
we know a few rules that help maintain relationships and ensure payment.

Plan to get paid

Businesses often pay one to two weeks late, regardless of invoice due dates. To ensure timely payment, set shoter payment terms for your business; many use 7-day terms.

Get industry specific terms of trade for your business which include who pays for late payment collection costs and any interest or charges that may apply.

Before you start work

Be clear on your pricing upfront, state what is included and not included in your fees and discuss your payment terms before doing the work.

Get sign off from someone with the right authority and check you are sending your invoice to the right person to ensure prompt payment.

During work

Get a deposit up front or do regular progress invoices rather than billing everything at the end of the job.  You could even offer a discount if the fee is paid in full, up front on commitment.

Keep in touch with your client and update them promptly if your fee needs to change and why, and get changes signed off.

At invoice time

Invoice promptly, if you invoice late, customers will assume they can pay late.  Make sure your invoice is easy to understand and in line with the pricing you gave.

Pre-call your client and ask if they have everything they need for the bill to be paid on time.  Be consistent, if your client says they will pay you on X date and they don’t, then call them, you need to teach them how to treat you and that you expect payment.

When the payment is late

Don’t take late payments personally or embarrass debtors; most intend to pay. If they don’t, uncover the reason—pressuring them could drive their business and payment to competitors.

Respect your clients; financial struggles like growth, delayed financing, or unpaid invoices might be tying up their funds. Disrespect can damage your reputation. Instead, consider allowing them to reduce their debt by paying extra over time.

In the case of a dispute, ask payment of the portion of the bill they are not questioning and work through the rest with them.  At least you can get some money in your bank.

Cut your losses for long overdue, normally good clients – maybe settle on a discounted sum they can pay,  then move on.  Use stricter credit terms for them in the future.

Our least favourite:  Don’t get in a fight, some people will use aggression to put you off and if they can get you into an argument, they have an excuse not to pay you, or so they think, maybe don’t work with these people again.

It’s gone too far

Call in a mediator, they consider both sides of the issue and help work towards a resolution. This could save the relationship if a compromise can be made.

If there is a dispute, go straight to the disputes tribunal, why wait? Debt collectors can’t lodge a bad debt of there is an open dispute.

When sending a final reminder, mention the specific debt collector, such as “CollectDebtsRUs will be in touch.” Naming them shows you’re serious and ready to escalate the issue promptly.

If debtors are disrespectful, evasive, break promises, or fail to pay, escalate to debt collectors according to your terms promptly.

How Katalyst can help you

Our favorite tip:

Outsource the awkwardness! If asking for money makes you squirm, let us bookkeepers step in. You can keep your hands clean and blame us when you tell clients, “The bookkeeper says no sale without payment!”—all while keeping your relationships intact.

Contact us if you would like help getting paid faster.

Glennis Stuckey

Director at Katalyst