Australians tend to be pretty laid-back and polite, but that can be a problem when it comes to asking for money that is owed. Whether it’s a friend that you’ve loaned a fiver or a customer that simply won’t pay, there is often a feeling of, ‘I don’t want to seem pushy. I’m sure they’ll pay soon!’
Unfortunately if someone fails to pay a business account within 30 days, the chance that they’ll never repay the money rises dramatically. If the invoice is more than 90 days overdue, you can pretty much kiss the money goodbye.
So, lets get one thing straight. If you have agreed to provide goods or services in return for payment, and the customer has agreed to make that payment in return for the goods or services, and you have then provided the agreed item, then that is your money! It might still be in their bank account, but you shouldn’t feel bad about asking for it. On the contrary, they should feel bad that you have to ask for it more than once (we’ll come back to this point shortly).
If you regularly need to chase unpaid invoices, here are a few points to help you get your money sooner.
Don’t offer credit. This might be hard to enforce, particularly if you have existing customers who pay by invoice, but if you are starting a new business it is a good idea to decide whether or not you need to offer credit. Retailers almost never offer credit, unless it’s through a third party such as your credit card company or a finance service they use. Accepting credit card payment isn’t as common for service providers, but it is worth considering, as it places all the risk of non-payment with the financial institution rather than with your business.
If you must offer credit, set out some rules that are enforced uniformly and that allow you to vet customers before credit is offered. For example, require that the first few payments are made in advance or COD before credit is offered, have a form they need to fill out that allows you to check their credit history, and have credit limits that allow for reasonable levels of trade without putting your business at risk if any one customer fails to pay.
Now, back to that point earlier. Make sure you have an efficient invoicing system! You can’t get frustrated with customers that don’t make payments on time if you don’t ask them for the money on time.
By Jennifer Lowe