How to get paid on time and recover unpaid invoices without banging on the door and ruining a client relationship

When I was Finance Director for a recruitment business who were having trouble getting paid. The Managing Director asked if he could use the photo taken of me at my last boxing match knocking out my opponent, and tell his customer that this was his Finance Director and if he didn’t pay he would get me involved! It’s probably not the best way to collect your cash and I would certainly not advise it not least as my fighting days are well behind me!

Asking for money can be awkward. We’re British after all! money’s a tricky subject! It’s especially hard when a good client starts to owe you money…

Do you chase aggressively and potentially ruin a great relationship?

Do you leave it, hope they will pay and risk cashflow problems?

Sometimes striking that balance can be hard. A poor credit control process can either kill a client relationship or leave your income drying up. You’ve got to find that sweet spot.

Some sectors especially pride themselves on a laid back, friendly culture. Which is great for attracting the right talent and nurturing a good work environment. But this can sometimes backfire when invoices are being left unpaid. A laid back approach to debt collection can put you in a challenging situation.

Many people freak out when they hear the phrase debt collection. Images of huge bouncer types kicking down doors with clipboards noting down goods spring to mind. But that couldn’t be further from the truth…

You don’t need to bang on the door for it, you don’t need to get all aggressive and annoy the client.

The first step is to ensure you have procedures and processes in place to prevent invoices from being left unpaid. As business owners, we’ve all been there ourselves where we’ve just forgotten about an invoice, and without a timely reminder, it would get left unpaid. We didn’t mean to not pay, but we just got busy.

So having good solid credit control processes to chase invoices regularly, escalating it when needed is an essential part of any business.

If you’ve got a debt outstanding you need to take action now. Don’t leave it and hope they will pay, perhaps they will, but more than likely they just need reminding and some regular contact.

The goal is to recover that debt without ruining the client relationship.

We worked with a digital agency that had in excess of £300k outstanding from one particular client. They were concerned about chasing the client too much, having heard stories of credit control firms hassling clients way too much and killing any future deals. So they left the debt unpaid, unchased and carried on working.

Your business may be lucky enough to ride a flow of unpaid invoices but there comes a point where you won’t have a business if you don’t get paid. Turnover looks great but if you’re not getting paid for your work, then it’s worthless.

Through the right processes and procedures, we were able to work with this agency. Recover the entire outstanding £300k from the client and keep that precious client relationship intact. Meaning they could continue to work together and get paid on time! A win-win for all.

I recently hosted a webinar titled “Gaining the confidence to ask for money that you are owed” and you can view the recording on our You Tube Channel

If you’re struggling with credit control or just need some advice on the best tools and methods to implement then give us a call we’d love to help.