Running a business in Indiana means that sometimes your customers or clients will owe you money. When your invoices are not paid, this can hurt your bottom line. However, it can be difficult to ask your customers to pay you without ruining your relationship with them.
There are several debt collection strategies you can use that can increase your chance of getting paid while maintaining your customer base.
Avoid doing the work first and billing later
Depending on the nature of your business, you may sometimes provide services first and then bill the clients later. This is a risky choice, for obvious reasons. It is too easy for clients to simply not pay once the work has already been done.
If you cannot get all the money up front, consider having clients pay a portion of the total price before you perform the services and pay the remaining balance when services are completed. This ensures you will get some of the money no matter what.
Make your invoices easy to read
Invest in good invoicing software, particularly one that is user-friendly to clients. There are many software options that allow you to send clients an email that includes a button that takes them straight to their invoice to pay their bill.
Additionally, make sure your invoices clearly state how much is owed and when. Sometimes clients do not pay because they don’t understand the total amount owed and the deadline.
Your clients should be able to immediately see the total amount owed, the due date and any penalties for not paying by that date. Have follow-up protocols in place when clients miss a payment deadline, such as sending a reminder email.
Have a diverse range of payment options
If possible, provide a wide variety of payment methods. Most people do not carry cash or checks anymore, and many businesses now offer options beyond even credit or debit cards. Taking advantage of today’s available technology for making payments can incentivize customers to pay more quickly.
It is always good to regularly review your invoicing policy. If there are areas that need improvement, consider hiring a professional to help.