There are few things worse than having to deal with late payments. Fortunately, though, with the right receivables management tactics, you can reduce the number of late payments you have to contend with. The easiest and most effective way to do that is through correctly worded, perfectly timed payment reminders and past due letters.
Tackle the Problem Before It’s a Problem
It never hurts to be proactive! When your customers have a payment coming due, go ahead and contact them as a courtesy reminder. They’ll appreciate the reminder- plus, they won’t be as likely to forget to pay. They can also alert you to any potential problems or “hold ups” on their forthcoming payments, keeping you in the loop.
The best way to word the “reminder” letter is to use words like “courtesy” or “convenience.” This will make your letter less likely to feel like an annoyance to the customer and more likely to feel like a favor. Be personable, friendly, and upbeat in your letter, making it clear that your customers are valued and appreciated and that they aren’t in any kind of trouble- you’re just reminding them of an upcoming payment for their benefit. You should also include information on how to pay and different payment options.
The First Letter
If your payment reminder didn’t get the job done, then it’s time to send out the first delinquent notice. Make sure you do this the very day that the payment becomes past due because the longer a debt goes unpaid, the less and less likely it becomes you will ever collect on it.
Make sure that you are still polite and friendly in this first letter. After all, there’s a good chance that the client simply forgot about the payment or that it’s already in the mail to you. You don’t want to damage your relationship with the client by being rude or overly demanding. Of course, that’s not to say you can’t still be firm in your wording. Be sure to list a specific due date, what will happen if payment is not received by that date, any late penalties applied or that could be applied, and where and how to pay.
60 Days In
If you still have not received payment after 60 days, it’s time to really step things up. Bear in mind, however, that you don’t have to wait 60 days to make further contact; in fact, you should be contacting your clients at regular intervals between the 30 and 60 day marks. When a bill does reach 60 days unpaid, however, It’s time to get serious!
Make your letter as firm as possible, without being rude or threatening, and use bold wording. Also make it very clear what actions will be taken if payment is not received. For best results, mark the envelope with words like “URGENT” or “IMPORTANT.” Your goal at this point is to get your client’s attention!
90 Days and Beyond
At 90 days past due, while still being polite, you need to be as firm as possible. Ditch the pleasantries and focus only on the consequences of not paying. Inform your clients that you can take legal action, and if they still don’t pay up, do it! You want to be a business that is taken seriously, not one that clients think they can use and abuse without punishment. Hopefully, though, things won’t get to this point, and if you follow these tips, there’s a much better chance they won’t. #paymentreminders