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7 Replies Latest reply: Dec 10, 2008 12:59 PM by Lighthouse24 RSS

How often do you follow up on unpaid invoices?

BizzeeBee Newbie
Currently Being Moderated
Hi All,

Here's a little background: It's been six weeks since I invoiced a new client of mine.

In the past month and a half, I've emailed the point-person a total of 8 times (not including brief email exchanges) and called her 4 times (left 3 voice mails and only got to talk with her once).

Today, after a call and an email, she sends me a very hostile email basically telling me to stop calling/emailing b/c she has real work to do.

Up until now, I've kept all emails/calls extremely professional, courteous and short out of respect for her time. I got the sense this task (dealing with me) was pushed on her so I tried to be as nice as I could. Also, I have asked her at least twice if she would prefer I followed up with someone else and she wouldn't give me another contact.

So, my question is this. Are 8 emails and 4 calls in six weeks excessive? How often does everybody else follow up? I've heard that some people call and email daily but that does seem like a lot. And should I respond to her email in kind or kill her with kindness?

Thanks in advance for your time and your insights.
  • Re: How often do you follow up on unpaid invoices?
    LUCKIEST Master
    Currently Being Moderated
    How often do you follow up on unpaid invoices??

    There are so many different ways to answer this question. What kind of business?? What are your billing terms?? How good is this new client NOW?? Do you hope to grow this relationship??

    Suggestion: Invite her out to lunch and have a friendly talk. Find out more about her and how her company pays.
    It will establish good will and maybe save the client.

    Good luck and let us know what happens, LUCKIEST
  • Re: How often do you follow up on unpaid invoices?
    Lighthouse24 Master
    Currently Being Moderated

    Yes, in my view, initiating twelve follow-up contacts in six weeks regarding invoice payment is excessive -- perhaps even harassing.

    Good cash flow management and payment collection requires:

    (a) a written policy regarding the terms of payment (do you have one, and did you verify the client's bank and credit references before you agreed to perform the work under the terms of payment that you did?);

    (b) incentives for prompt payment and penalties for late payment (does your invoicing provide for those?);

    (c) consistent and professional billing practices.

    For instance, if you want to be paid in 20 days, then offer a discount for paying by then. If they don't pay by then, the your standard billing practice might be a voice mail on Day 20 noting that you're sending another invoice with full payment due on a specific date. If that date arrives and payment is still pending, your policy might be to send a courteous letter with a copy of the invoice reminding the client that payment is now overdue and that a late payment penalty will start accruing as outlined in your billing policy. You could then follow up with a phone call inquiring as to whether some type of payment plan needs to be negotiated.

    Just like individuals, some companies always pay their bills promptly and some almost never do. Some large firm and government agencies have lots of administrative layers that an invoice has to travel though, and that can take time. Some small businesses use outside services that only process and pay invoices once a month. Aside from those things, slow payment usually means the client has money problems (which you would ideally discover before extending payment terms), or it means the client was dissatisfied with the work after the fact. To be sure it isn't that latter one, make it a practice to call the client after the work is complete. Ask for the client's acknowledgement that everything was satisfactory, note that you are putting the invoice in the mail now, remind the client that there is a discount for payment within 20 days (or whatever your policy is), and get a verbal confirmation that payment will be sent by then (or that it won't, if the client needs longer to review and process it).

    With good billing practices, it would be reasonable to contact a client regarding payment three times -- or maybe four -- in six weeks, but not twelve times.

    Hope that helps. Good luck.
    • Re: How often do you follow up on unpaid invoices?
      amspcs Master
      Currently Being Moderated
      Lighthouse--

      I agree with much of what you say. First and foremost, a written understanding of terms is an absolute must.
      This may or may not require a separate document (such as a credit application), but the stated terms on a presented invoice should also suffice, as long as terms are reasonable and normal for the industry in question.
      I might add that the vendor sets the terms, not the customer. I've had delinquent customers tell me that they pay on their terms, not on mine. The appropriate and correct response to that, always expressed politely and professionally, is that we have one business policy for everybody.

      However, I have to differ with the notion that 8, 12 or whatever number of communications is excessive or harrassing. As long as the invoice remains past due, collection efforts (again, always courteous, professional, but firm) should continue and persist regularly witihout limit or pause until such time as the invoice is due. After all, if the debtor is unhappy with the collection efforts, then there is a simple solution to that problem, isn't there?????....pay the past due bill !! Verbage, at least initially, should stress that if there is some reason for non-payment such as dissatisfaction with the product or service, then you are committed to working with the customer to make things right. But if dissatisfaction is not the issue, then the vendor
      has the green light to collect as necessary.

      In fact, the key to any sound accounts receivable program (I used to train just this subject professionally some years ago) is that the best time to initiate collection efforts is when the account hits the 30 day level, not to wait until 60, 90 or heaven forbid longer.

      I could go on and on with this subject. But to lend any credence whatsoever to the customers obvious attempt to intimidate the vendor and divert blame is ludicrous.

       


      AMSPCS
      • Re: How often do you follow up on unpaid invoices?
        Lighthouse24 Master
        Currently Being Moderated

        AMSPCS, you seem to have read a lot of stuff into my post that I didn't write. What I said was, ". . . send a courteous letter with a copy of the invoice reminding the client that payment is now overdue and that a late payment penalty will start accruing as outlined in your billing policy. You could then follow up with a phone call inquiring as to whether some type of payment plan needs to be negotiated."

        I didn't say ANYTHING about what happens after that. I sure didn't suggest that the business owner just let things slide. I teach this stuff, too ("How to Get Paid AND Keep Your Customers"). In general, if you wait a month past the due date to initiate collection efforts, the odds of being paid drop by 8 percent. If you wait three months, they drop by 28 percent. For some service businesses, the numbers are even worse. When payment is overdue, you get after it immediately. I didn't say anything to the contrary.

        In this instance, however, the post didn't say that. It said that there were twelve contacts regarding payment between the day the invoice was sent and six weeks later -- quite possibly, ALL of those contacts were made prior to due date the client initially understood or expected. I think that would really tick off most professionals. It might cause the loss of future business, and with some clients, it might also cause the "loss" of the invoice and delay payment even more (especially if there's no stated policy/penalty).

        • Re: How often do you follow up on unpaid invoices?
          amspcs Master
          Currently Being Moderated
          Dear Light--

          Sorry to have gotten your dander up, didn't mean to. I guess what jumped out at me in your post was
          the initial statement that however many contacts seemed excessive. You're correct: If those contacts
          appeared before the due date of the invoice, that might be a tad irritating to the recepient. That said, most reasonable people understand that business is business, the messages were not personal, and the sender was merely trying to maintain an effective receivables procedure Nothing wrong with confirming receipt of an invoice and flushing out any hints of problem or dissatisfaction in advance. If the recepient objects to the advance communications, a good way to handle that would be to ask if the shoe were on the other foot and
          it was their receivable, would they prefer a receivables manager who was on top of things, or some mamby-pandy type who waited until it aged 60-90 days or more before initiating the first contact?

          Regarding the communications that were sent after due date, that's justifiable. No effort or number of collection communications is excessive.
  • Re: How often do you follow up on unpaid invoices?
    Iwrite Master
    Currently Being Moderated
    There are some things we just don't know, but need to:

    Was this job part of an ongoing project?

    What are the payment terms given to the customer (not everyone is 30 days, I'm not)?

    Is your contact person the individual who initially green-lighted the project?

    How does this help? If the job is part of an ongoing project you may need to weigh the possibility of damaging the relationship, and you might consider amending your pay policy to prevent this from happening again (either way you need to worry about the relationship).

    If the terms were 30 days, they are late by two weeks but your post seems to indicate that they are 6 weeks late, meaning this job was to be paid upon completion. Late is late, but time does factor into this.

    If your contact person is not the individual that open the job, then send your contact person a nice email informing her that you will be contacting that person or the owner of the business about this matter. Remain professional but there is no rule about going above someone's head.

    In this age of the Internet there is a method that has long been forgotten - it is called getting in your vehicle and going over there for a personal visit. All you calls and emails have done is annoyed her. A in person visit changes the dynamics of the situation. And allows you to gain an insight into the situation, there is a lot you can learn about a business by simply visiting it. Now, some will be against this and I understand why, but I really believe some of this can be resolved with a little human contact.

    I've had an invoice go over 120 days late. And in that time the owners of the agency were stonewalling me left and right - they lost the invoice (which I emailed and mailed AFTER hand delivering the first copy); they had a change in accounting and thought the check went out; the check was in the mail, twice. This was a nice size project that got them plenty of inquiries and press, and it took me stopping by to get a check cut. I wasn't angry or unprofessional, I did show up unannounced and sat in the waiting area for almost an hour but I left with my check.

    After that I changed my policy to avoid having to do this ever again.

    So, I say all of this to say, "depending on the amount of time the payment is late - the number of calls may be excessive but one visit may help to resolve this quickly and easily."
    • Re: How often do you follow up on unpaid invoices?
      Lighthouse24 Master
      Currently Being Moderated
      Well, the one thing we do all seem to agree on is that it starts with a written policy.

      If a business provides a one-time service to individual consumer customers, it makes sense (to me) that it would have a fairly rigid policy and a more aggressive follow-up process than a business that provides ongoing services to other businesses, non-profits, or government entities.

      My company is the latter, and while our billing/payment policy is always provided in writing, it isn't the same policy for every client.

      For instance, the federal government and its prime contractors always pay, but they don't pay fast. My invoices to one contractor are reviewed by eight people in that company, and by as many as three of their federal agency counterparts. It may sit in eleven in-boxes in five different cities before the check is finally cut. So it's going to take however long it takes -- 70-80 days perhaps. I could pester my point-of-contact about it that whole time, or I could go over his head, but it wouldn't make that bureaucracy work any faster, and it really might irritate the people I bothered (because they're each doing their part as a cog in the payment machine).

      In contrast, I have a music industry client whose president believes that paying promptly is a key to building loyalty and commitment among anyone that firm does business with. He personally tracks/reviews their turnaround times on payables -- so if I haven't received payment five days after I invoice them, I call my point-of-contact then (because the president will be calling her soon after that to ask why there's still an unpaid invoice).

      My policies are different for different types of clients, and the contract that's negotiated with them up-front takes into account how long I'll be waiting for payment. (If I was in the residential carpet cleaning business or something like that, I would be less "flexible" and more "insistent" about prompt payment.)

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