5 ways to get clients to pay outstanding invoices

There’s nothing more frustrating than waiting on outstanding invoices to be paid. Even more, there is discomfort when we have to remind clients to pay up. Outstanding payment issues can sabotage the smooth running of a business due to an interrupted cash flow.

Big and small businesses experience the pressure associated with waiting on payments from clients. In some situations, a gentle reminder to pay overdue invoices can return to ‘bite us in the butt’, especially with delinquent customers. Bite us in the butt’, especially with difficult clients. That’s why the big deal isn’t about talking to clients to pay outstanding invoices.

It’s more about being persuasive to win your client’s willful cooperation without coming off like ‘the Hulk’. Here are five interesting ways to get clients to pay outstanding invoices:

Be Proactive

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The first goal is to avoid overdue payment issues. We recall those weird moments when it feels right to make legitimate demands and claims only to realize that we got it wrong. There’s nothing more embarrassing than sending payment reminders only to realize that you were at fault the whole time. By being proactive, we mean going back to the drawing board.

Check with your employees and office assistants to ensure that you follow all requisite steps to track invoices and ensure timely payment. You need to ask yourself some questions concerning the payment plan and answer them before reaching out to the client.

This helps you to stay ahead of overdue payment issues by reviewing your invoicing process to avoid those embarrassing moments that could damage your business reputation. A few of such questions include:

  • Did I include the correct invoice number when I sent the invoice?

  • Were the terms of payment clearly stated?

  • What’s the actual amount due?

  • Was the right invoice sent to the appropriate client?

  • How convenient is my payment process?

  • Is my own address accurate?

  • Have I corresponded to check in on my client?

If you take the time to ask and answer these questions, you might realize that you’re the reason behind the outstanding invoice. This will enable you to get paid without resorting to situations that make you appear to be badgering your client. Being proactive means you take precautions to ensure quick payment and avoid the stress of dealing with outstanding invoices in the first place.

Create a Customized And Systematic Collection Approach.

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The purpose of your collection strategy is to reduce payments after the due date. It also entails creating efficient processes to eliminate the need for manual activities and time-consuming manual payment deadline reminders. Automating first email reminders, for example, will allow you to focus on riskier accounts.

Then, you should devise alternative collection techniques based on the type of account, how much they owe you, and how late they are. You should not make identical payment requests to "bad payers" (clients who frequently pay late) as you would to your main accounts. In the first situation, send a reminder before the invoice is due. For larger accounts, make sure to customize your reminders and begin with a polite call, for example.

Whatever way you split your clients, make sure that everyone receives a consolidated view of all their bills to eliminate confusion about their outstanding balance and when it's due. Instead of sending multiple reminders for each outstanding invoice, send one reminder that consolidates the money owed into a single notice. In this manner, your clients aren't inundated with reminders regarding payment deadlines.

Use Positive And Negative Feedback Simultaneously.

Your clients are not robots; therefore, there’s no ‘on/off switch' option for getting quick payments from them. As an entrepreneur, understanding human nature and inclinations is key to doing good business. No two clients will have the same response to payments, which means you must be fluid and flexible in your billing system.

  • By positive feedback, we mean offering early payment discounts as incentives for early payments. A good example is offering a certain discount for the proverbial ‘early birds’. That is to say that clients who make payment within a specified period, perhaps 14 days, get a certain percentage of the actual price.

  • By negative feedback, we mean creating a late payment fee for clients who miss the deadline. A good example will be putting a certain percentage increment on the actual price for clients who make payments after the discounted period of, perhaps, 14 days.

The key to this strategy is based on the fact that people are motivated by different factors, some positive and others negative. By operating both systems, you get paid on time either way.

What is The Distinction Between Outstanding Invoices And Past-Due Invoices?

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When expressing the payment status of an invoice, the phrases outstanding and late are sometimes used interchangeably. However, the two words are not synonyms, and the distinction is more than merely semantic.

  • When an invoice is outstanding, it signifies that your client has not paid for a service but has yet to meet the payment date.

  • When an invoice is past late, it indicates that your client has not followed his payment terms and has not paid for a service. The deadline for doing so has passed. This is often referred to as a past-due invoice.

At first glance, an unpaid invoice does not appear to be a concern. After all, your client could still pay before the invoice due date, and chasing an overdue invoice costs you both time and money. However, if your bills cross the 90-day mark, they are 60% less likely to be paid.

Thus, rather than waiting for late invoices, you are more likely to obtain your money if you develop a payment strategy targeting clients while there are still outstanding invoices.

Why Should You be Concerned About Unpaid Invoices?

  • Cash is the lifeblood of business owners, particularly small business owners: Most businesses base their success on net credit sales. But what's the point if the money doesn't come? Regardless of your most recent funding or the amount of money in your bank account, the payment cycle is critical and should be a top priority.

    If you want to enjoy prompt payments and avoid the scourge of outstanding invoices, then incorporate multiple payment methods to ensure your invoices are paid on time.

  • Accounts Receivables are costly; collecting payment entails more than simply requesting that "bad payers" pay their invoices. Late payments can indicate an underlying customer conflict, a pricing disagreement, a poor market fit, or other issues for a small business owner. If detected too late, these might have disastrous consequences for small business owners.

How to Collect Outstanding and Unpaid Invoices Efficiently

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Collecting outstanding and unpaid invoices can be challenging, but implementing strategies like setting clear terms and sending regular, professional reminder messages can help bring the late payment back to the customer's attention. Here are some detailed tips to help you manage and collect outstanding invoices effectively.

1. Set Clear Terms

From the start, ensure that your payment terms are clearly outlined. This includes specifying the due date at the top of every invoice. If you have clients who frequently pay late, consider adding additional notes about payment terms and due dates to the invoice to emphasize the importance of timely payments.

2. Send Reminders

Often, overdue invoices are not a sign of avoidance but simply an oversight. Sending a polite payment reminder email can help bring the invoice back to the customer's attention. Sending a formal demand letter can save time and ensure consistency when dealing with overdue invoices.

3. Institute a Late Fee

If you notice too many outstanding invoices, consider implementing a late fee policy for new customers. Clearly state these terms in contracts or agreements to ensure customers are aware of the penalties for late payments.

4. Send an Overdue Invoice with a Different Layout

When an invoice becomes overdue, try changing its appearance to catch the customer's eye. Use bright colors or a bold header to highlight the due date, the full amount owed, and any penalties. This visual change can create a sense of urgency.

5. Go Analog

Sometimes, a digital reminder isn’t enough. Sending a physical bill to the customer’s address or making a phone call can be more effective, ensuring a timely payment. These analog methods are harder to ignore and can prompt quicker payment.

6. Offer Flexible Payment Options

Providing multiple payment methods, such as credit cards, ACH, or installment plans, can make it easier for customers to make invoice payments on time. Flexibility can help accommodate their financial situations while ensuring your business receives payments.

7. Seek Professional Legal Advice

In worst-case scenarios, hiring a debt collection agency might be necessary. Although hiring a lawyer or going to small claims court can be expensive, so it may be helpful to consider what the total recovered payment would be worth and what type of customer you are having the issue with. A legal professional can offer guidance on potential actions, including taking legal action if required.

Get Paid Now with Paystubsnow.

It’s always safer to engage the services of an invoicing company like Paystubsnow to curate for you. Paystubsnow helps business owners avoid outstanding invoices from the outset by generating proper invoice systems, facilitating faster/accurate payments as well as maintaining excellent correspondence.

By this, you'll never have to worry about outstanding invoices and how to get clients to pay them. Business survival and growth are all about strategy. There are rare cases where certain outstanding invoices/overdue payments may not be worth the time and effort. Other Paystubsnow services include helping you generate your 1099 and creating employee paystubs.

Blog Post FAQ

PaystubsNow offers a suite of tools to help small business owners streamline their financial operations. Our invoicing tool is a free service that can certainly be used to help with invoice collection. In addition to this, many users highly recommend our paystub creator to help simplify their payroll management process.

Answer: Using an electronic paystub system comes with many advantages. First and foremost, it allows for easy and efficient tracking and record maintenance for the payments. It presents your clients with a hassle-free, convenient and fast method of payment. Additionally, integration of electronic paystub eliminates the risk of losing physical documents, as the digital format ensures stored and easily accessible invoices at any given time. Furthermore, it allows your clients to have a clear and immediate understanding of the payment breakdown, contributing to transparency and trust building in your professional relationship.

A Paystub Online is a digital form of a traditional paycheck stub that provides comprehensive details of employees' earnings, deductions, and net pay. It can assist in getting outstanding invoices paid by providing transparency and clarity in payment details. Businesses and freelancers can use a Paystub Online service to generate professional and detailed paystubs that clearly itemize any outstanding amounts, thus facilitating faster payment of invoices. This digital solution makes the process efficient and simple, ensuring both parties have a clear record of payments due and received.

Answer: Using "my online paystub" can significantly expedite the process of settling outstanding invoices. By keeping a digital record of the payment information, it is easy to keep track of who has paid and who has not. If a client has an outstanding balance, you can quickly refer to the paystubs online and remind your client about the unpaid invoice. It offers transparency and convenience, promoting swift and smooth transactions with your clients. It is a digital solution that reinforces accountability, favoring prompt payment.