Customers who won’t pay your bill risk ruining their credit, reputation, and relationship with your business. Most customers pay their bills, but some will either pay very late or not at all. As a business owner, it’s your job to make sure you know who has paid and who hasn’t. Follow this simple guide to get your customers to pay their bill.
1. Send a thorough bill. This might seem elementary, but some businesses simply forgot to send the initial bill. Maybe you and the customer agreed on a price, and you finished the work and are expecting the customer to cut you a check. Leave nothing to doubt – send the customer a bill. Make sure the bill includes details about the work you did such as the project name, date completed, and amount due. Your bill should also include your business contact information and payment terms. Payment terms can be anything you choose, however; most businesses choose to have customers either pay immediately, within 10-15 days of receiving the invoice (net 10), or within 30 days of the invoice date. In a very obvious place on the bill, outline consequences for late payments. For example, you might write “Thank you for your business. Please note that late payments will be subject to a $25 late fee and may be reported to the credit bureau.”
2. Follow up. The best way to follow up with a customer who won’t pay their bill is to talk with them over the phone or in person. It’s very important how you approach this conversation. If there’s someone else in your office who can make the first call, have them do it. This leaves your options open and allows you to come in as a “last resort”.
The first call should be a courtesy call to check to make sure the customer received the bill. If they didn’t, see if you can fax another one over immediately and then check back 30 minutes later to ensure the customer got it. Once you’ve confirmed the customer received the bill, ask for payment. Two ways to do this are to either ask to take the payment right then over the phone, or ask when you can expect to receive the payment. If the customer doesn’t pay right then, write down the date you talked with the customer, who you spoke with, and the promise date in the customer’s file. Put the promise date on your calendar so you won’t forget.
3. Payment arrangements. Once you’ve confirmed the customer received the bill, you can begin to pursue payment more aggressively. If the customer can’t pay the full bill when you follow up, set up payment arrangements. A good rule of thumb is that the entire bill should be paid within 30 days. On occasion, you might stretch it to 60 days for extenuating circumstances (death, hospitalization, etc.). Make sure the payment arrangement is in writing and covers the following: amount of debt, amount to be paid on specific dates, and the written understanding that if the agreement is not kept, the customer’s account may go immediately to collections and the credit bureau.
4. Remain professional. When a customer doesn’t pay your bill, it can seem like the sky is falling… and maybe it is. Regardless of your situation, it doesn’t do any good to scream or cuss at your customer. In fact, it could damage your professional reputation and cost you business in the future. Stick with the facts, leave emotion out of it, and simply state that the customer must pay or you’ll report his account to collections and the credit bureau. If you can take your customer to small claims court, do so. It’s important that customers take your business and bills seriously.