7 ways to get paid quicker and a $25,218.61 letter

When you’ve done the work, you should get paid. It’s as simple as that.

Imagine if you or I went to the supermarket, piled the trolley full and then left an IOU note at the self-service checkouts.

Unfortunately some business services and types don’t work like that. They are more likely to get paid after the services are provided or by installments.

These businesses often struggle to maintain cash flow because they haven’t built a strong payment timeline into their business dealings, they aren’t sure how long to wait before following up with a payment request or they don’t know how to word the reminder for payment.

Ensuring you maintain cash flow is key to keeping stress levels under control.

If cash flow is stressing you out or you just want to spend less time chasing payments, below you will learn how to:

  • Build a solid payment structure into your daily business habits.
  • Use proven psychology for following up on late payments
  • Fire off a payment demand letter that gets $25,000+ results within days (get the template version here)
  • Increase the chances of your invoices getting paid on time with three easy to implement ideas

Want to get stuck into the letter? Here you go, just edit in the relevant details to this template.

Run the numbers & check your details

Before you launch into payment reminder mode, first you need to make sure you have all the details correct.
  • Was the invoice you sent correct?
  • Did you actually send the invoice?
  • Did you post or email the invoice to the correct address?
  • Has the correct person received the invoice?
  • When was the invoice due and has the due date passed?

Once you are sure you have an overdue account… time for next steps!

How long to wait before I send a payment reminder?
How long you choose to wait before reminding customers may depend on the type of business you have and the type of customers.
If your payment terms are 14 days, you might want to wait a further week. Other businesses chase all overdue accounts at the same time each month, regardless of how overdue the amount is.
You should consider what you think is reasonable and what cash flow blows you can take.

Solid payment terms

Set up standard payment terms and stick to them.
Suggested Payment Terms
If you have been more relaxed about payments in the past, make sure your regular customers are aware of the change, perhaps with a call and a follow up email, to let them know that in the next month or quarter, you are moving to 14 day payment terms.
Feel free to point to your accountant, a new bank account, upstream supplier costs, new invoicing software, or any other factors as bringing about the change.
Have a set timeline for payment
1. Job Completed: Do what you do best!
2. Send: If you didn’t leave the customer with an invoice on the day, post or email an invoice as soon as possible – the sooner you send the invoice the sooner you get paid. Clearly state when the due date is and when do you expect to receive payment.
3. Courtesy: On the due date, consider checking in as a courtesy to ensure there are no issues with the products and services provided. No need to mention payment, just a friendly check in to keep your business front of mind for the customer.
4. Friendly: 7 days after the due date, consider sending a brief follow up reminder for payment, keep it light and friendly. Make sure you have the details correct (see above) and then send a short email (see below example) or consider the below sample phone text message if you that’s how you communicate with customers.
Friendly sample reminder text

Hi! Hope you’re well. Just following the invoice sent on 15 June to office@company.com. Could you please check it was received? Happy to resend if you need. Otherwise, please send payment this week. Thanks! 

 

Friendly sample reminder email

Hello Miss Customer!

Hope you you are well and the [PRODUCT / SERVICE] is still working nicely.  Just a quick note to follow up the invoice that I sent / emailed on 15 June as I haven’t received payment yet.

Could you please check it was received? I’ll be happy to resend if you cannot locate it. Otherwise, I look forward to receiving payment within a week.

Let me know if you have any questions or I can help with anything further?

Thanks for your help and look forward to speaking again soon!

Kind regards,

Ms Rider

 

5. Formal: When payment is two weeks or more late, it’s time for a more formal letter that firmly reiterates your right to payment. The below sample text utilises a psychological tool known as social proof, which tends to encourage people to pay because other people already have.

Formal reminder email / letter

Hello Miss Customer,

I’m following up the invoice I sent / emailed on 15 June as we haven’t received payment yet. I’ve attached/enclosed a copy for your reference.

Payment was due for the [PRODUCT / SERVICE] on 30 June and we are now two weeks past the due date so would like to receive payment at your earliest convenience. 

All other payments for other jobs in June have been received in full, so I’m sure you can understand it would be great to finalise this payment to close off our accounts for the month.

We really enjoyed working with you so please let me know if you have any questions or  if I can help with anything further?

Otherwise, we will look forward to receiving payment by the end of the week.

Thank you for your assistance.

Yours faithfully,

Verity

 

6. Demand: If the first (or second) friendly reminder doesn’t get the money rolling in, it might be time to play it a little more firmly. There are a few important points you need to include in a demand for payment.

  • How much is owed
  • Why it is owed / what it is owed for
  • When it needs be paid
  • A warning that you will consider legal action not paid within a certain amount of time
  • A clear subject line such as Letter of demand or Final Demand shows you are serious about getting paid
  • Send it addressed to the owner (not the accounts department)
To make life easier… just edit in the relevant details to this template.
I used a similar version of this letter when friends had tried for months to get a direct debit provider to pay up around $25,218.61 as agreed in a partly written and partly oral contract.
My friends got their money after a similar letter in less than a fortnight.
Get paid upfront

If you hate chasing up payments, the best defence is a good offense.

Ask people to pay on the day of providing services wherever possible or at least for upfront cost such as materials.

Get paid on time

Encourage clients to pay on time, every time, by offering them an incentive.

Offer a Pay on Time Discount

People seek pleasure and avoid pain

Offering a pay on time discount introduces a bit of FOMO (fear of missing out) into the equation. You can tap into the  Pleasure Principle and the Regulatory Focus Theory – people seek pleasure and avoid pain. If customers think they can get a discount for paying on or before the date on the invoice (pleasure) and also avoid the higher price point for payment after the due date (pain).

 

Bribes for the admin team.

Flowers, birthday cards, a bottle of sparkling at Christmas, just because treats and other simple gifts for those who actually make the payments happen will go a long way to putting your invoices at the top of the pile each month. Always be polite and courteous to all office management staff.

 

PayPal tap and go card reader (check it out here)

No more worries about not accepting credit cards on the day and no monthly fees. For $149 cost for the unit and a 1.95% transaction fee (which you can pass on to customers provided you make them aware of it before hand).

Try one of the above with your frequently late payers and see if it makes a difference!

Let’s go get this money!

  • Try out the template for those long term overdue payments
  • Test out methods to entice your customers to pay on time
  • Decide on what you want your payment terms to be – and apply them consistently

 

I’d love to hear how you go with the template or any other ways you encourage clients to pay you on time.

 

What methods do you use to ensure you get paid on time?

Cheers Verity

 

P.s. The Australian Government has lots of help for small businesses including around payment demand letters.

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