6 tips & tricks to Get Paid without Offending the Client

Here are 6 tips and tricks to navigate the tricky route of getting overdue invoices paid without offending your client.

If you are lucky to work in the mortgages industry, very rarely do you have to chase receivables. However if you are a consultant, chasing your own money can be quite a challenge with many clients. Receivables are a delicate matter. Most clients, at the beginning of the contract intend to pay on time but several times due to the economic scenario faced by the client, cash flow can be tight. It is most likely the clients themselves are behind their own receivables and have to prioritize payments due to a shortage of cash at their own end, resulting in non payment of the money due to you.

However as you surely need the money and the relationship you have to tread lightly. Rather than using punishment like late fees and guilt trips, it is a good idea to take a straightforward approach.Payment 1

  1. Mention clear dates for deliverables along with payment terms : This can be done by establishing clear dates for payment and tying deliverables to that date. That way the possibility of getting the payment for the final deliverable is far higher. You will benefit immeasurably at this stage by things you have done earlier in the process. The first of these is to ensure your customer has at least seen and preferably signed a set of your terms and conditions. This should state clearly what you are going to do for them, what you are going to charge them and it should also be clear about when your invoice should be paid.
  2. Offer a slight benefit or discount for paying early : Another proactive method would be to offer a slight benefit or discount for paying early. If they are managing profits as well as cash they may appreciate a 5 percent discount for being diligent.
  3. Be clear on your invoice about your terms : Never use terms like “30 days nett”. An unambiguous statement like “Please pay within 30 days from receipt of invoice” is all that is needed. It is not a good idea to be too generous. Most consultants give companies 30 days to pay. However, most companies have the ability to turn payment round in 7 or 14 days. 
  4. Establish a path to payment with internal allies : Establishing a personal relationship or friendship with someone on the client side is crucial to securing timely payments and “being nice” can score high in getting paid on time. Once a relationship is established and when a customer does fall behind, you can send a friendly e-mail to the contact providing the information regarding any invoice that you have attempted to resolve with the accounting department.  After receiving this email, the contact is typically embarrassed by the situation and will escalate the invoice for payment and take it through the payment process. Patience and diligence is important to maintaining the proper relationship–you can’t get flustered or demanding. Most companies fail because they wait until there is a problem before trying to establish an internal advocate.
  5. Use leverage : If payment becomes overdue, you should chase the customer straight away – the day it becomes overdue. A polite letter or email stating that the invoice is past due and you would appreciate payment by return. No need to be threatening at this stage. Many a times the consultants have the tendency to get furious when people don’t seem to understand that this is how they make a living and that they need to be paid in a timely fashion. But, getting angry is useless in such situations. Most clients usually pay up before receiving a Lawyer’s notice. If you are on a retainer or on a long term job, you could stop work until receipt of the next payment. This works in most cases. In extreme situations you could take your claim to court. However, it is important to think carefully before doing this because this will certainly lead you to incur fees that might end up being larger than the invoice amount to be collected.
  6. Cut your losses: There will always be that one client who will refuse to pay the full amount because they encountered unanticipated repair expenses. Most often the agreement does not include an allowance for such expenses. Remember revenue is revenue.  Such clients often tread a moral high ground and will make  it clear that they have no intention of paying. Rather than getting caught up in the negativity it is better to let go of the client and invest the time in prospecting for new clients. This will lead to more income from new clients and accounting for this as bad debt.