This post is the first in a series of “how do I say this” for PPC professionals. Pulling from my 25 years in business, I’m offering my thoughts on how I might handle specific situations. All suggestions offered here are just that – suggestions. Only you know what is best in your specific situation.
Clients are late paying invoices for a lot of different reasons. Most of them have nothing to do with us and the quality of the work we are doing for them. But, that doesn’t mean that it does not impact us when a client is late in paying.
So how to handle this potentially sticky situation?
I like to start from a place of assuming that the invoice got lost in a shuffle and not that the late payment is intentional. My first reminder would sound something like this:
My most recent invoice (insert date, invoice number) for (insert what work included) totalling (insert invoice total) is currently showing as unpaid in my system. I am attaching it for easy reference. Please let me know when I can expect payment to occur.
In my experience, this is usually enough to get things paid. I would send this a day or two after the payment term period has passed. So if you send your invoices as net 30 (meaning a client has 30 days from the invoice date to pay and be on time) then I would send this reminder on day 32 or the next working day closest to day 32 from the invoice date.
I would give the client 2 full working days to respond. If there is no response, you will need to kick it up a notch in your communication with them…
My second notice – and the client is now 5 days past due – would start to talk about what happens if it remains unpaid:
I sent a reminder for (invoice date, number, work done and amount) on (date reminder sent). I have not received a reply from you nor have I seen a payment come through. If a payment has been made, please let me know and I will be on the lookout for it. If a payment has not been sent, we will need to discuss payment installments and potentially suspension of work.
Did I mention that you should have very clear terms in your contracts stating payment terms and what happens if a client is late paying? I am also a big fan of pre billing for work to be performed. So, if you are doing management of accounts, I would strongly suggest billing for the next month’s work in the previous month. That way the client cannot get too far into you doing work for them and them not paying for said work!
Ultimately, you have to decide how hard of a line you want to take with any client. But, continuing to do work for clients who are not paying for months on end does nothing but let them take advantage of you. Sometimes clients will have a temporary situation that makes it hard for them to pay on time and you can be as flexible as you wish with them. I have had clients that ran into temporary financial trouble. But they were honest about it and I put them on a payment plan.
If clients do not respond to your second reminder, then I would stop doing work for them until they paid. I would send a notice letting them know that is what would happen that would say something like this:
I have not received a response or payment. While I hope this is just an oversight or there is some extraordinary circumstance in play, until I either hear from you or see a payment come in, I will unfortunately need to temporarily suspend my work on your account. If you have sent a payment, please let me know as soon as possible and I will check to see that it has come through on my end so that we may resume our work together.
If you need to discuss modifying payment terms, please contact me about that as well. I try to be as flexible as I can with my clients.
No one wants to face a situation where clients are either consistently late in paying you or not paying you at all for months at a time. You owe it to yourself to not just let it go on and on. Most times when I have been in this situation, the client has responded to the first or second reminder and gotten back on track with no lasting issues. So don’t be afraid to stand up for yourself! You are, after all, running a business.