By Lynne Darcey Quigley, CEO and founder of corporate debt collection specialists Darcey Quigley & Co, advises on how to send effective letters, emails, and invoices to late payers.
If another business owes your business money, chasing this debt is no easy task – but it is imperative you secure the payment as soon as possible. Research puts the total amount of late payment debt well into the billions, and with insolvency rates starting to skyrocket, time is of the essence.
Despite the gravity of this debt as a national issue – the basics still apply. Communicating with late payers relies on being polite but firm, and most importantly, persistent. A late payer will use every excuse under the sun to avoid their responsibilities, but you must exhaust every option before you call the experts for help. This means starting with the basics – emails, letters, and invoices. If these are all done correctly, you leave the late payer with no excuses.
Ignorance is often the go-to excuse for a serial debtor or a sneaky customer – and any confusion or mistakes in the invoicing process will be exploited as an excuse not to pay.
So, starting with some all-too-often forgotten basics:
Make sure all the details are correct such as addresses, payment details, correctly itemising products/services delivered and checking your invoice and reference numbers are accurate. Also, make sure you include your VAT information if you are VAT registered.
Send it to the right person, in the correct department. If you do not know the best person to send your invoice to, get in touch with your customer and double-check.
When sending an invoice, always include it as a downloadable pdf file, with a relevant file name, as an email attachment. This makes it safe, universally accessible, and when they save it, it won’t just be a string of numbers in their overcrowded ‘Downloads’ folder.
Include as much relevant information in your email subject line, so both you and your customer will find it easier to find the invoice if needed.
When it comes to writing your email, there are some key details to include in the body of your email:
- Invoice number
- Payment date
- Your name and company
- Information on the product or service delivered
- Sending a reminder on your payment date
When your payment date arrives, we recommend sending a gentle reminder that payment is due that day. Include your company and invoice number and “payment due today” in the headline, so your customer will instantly see that the invoice needs to be paid that day.
At every point – send all relevant details, such as the original invoice, the total due, the due date, etc. This makes it harder for the culprit to claim ignorance.
Email to chase payment
If a payment is missed, it is best to chase it immediately. Mistakes can happen, and your missed payment could be entirely accidental. However, many are not – and there is also the chance that your customer may be intentionally avoiding paying.
You do not want to compromise your relationship with your customer. After all, your reputation and repeat business are at stake, so it is essential always to remain courteous when chasing payment – but don’t forget to be straight to the point.
Again, include everything you can in your follow-up emails – and highlight the date the payment was due.
Often a light prompt is all it takes for an overdue invoice to be paid. However, you may need to take a firmer approach if your first chaser email is ignored, or you are stalled. Your more substantial chaser email will have a greater sense of urgency – but again, remain polite. A measured and reasonable tone goes a long way and being too firm may put someone off paying as soon as they can.
Sending letters to chase late payment
Sending a letter to chase late payment is very similar to sending emails. In fact, your approach, the language you use, and when you send them are very much the same as the emails we covered.
Now, you may be asking what the point in sending letters then is?
When chasing overdue payment, you want to be as hard to ignore as you can and communicating with your customer across multiple channels keeps you in the front of your customer’s mind and harder to avoid.
The typical business email inbox can be a very hectic place, often meaning your emails could be missed. As businesses receive so few letters each day compared to the number of emails, there is a far lesser risk of a missed letter.
The downside to sending letters is that they are more of an inconvenience to send than email, so you may want to save letters for your more critical communications, such as when an invoice becomes overdue.
Writing a warning letter chasing payment
A warning letter is the first letter to send once an invoice is overdue. A firm but polite approach is the best approach to take, and you should include:
- Your company name and address
- Your customer’s name and address
- Invoice number
- Total amount owed
- Payment date and days overdue
- Explain that payment terms have been breached
- Payment details
- Your contact information
- Ask your customer if they have any questions since this could be what is delaying the payment.
- Include a copy of your invoice with the letter
Getting The Professionals Involved
The direction of the UK economy, and the rapidly rising numbers of insolvencies, means you should act sooner rather than later – before it is too late. Deciding whether to outsource debt collection to a third party is a big decision for a business to make, and sometimes they can be nervous if they have not used a debt recovery partner before.
If you find yourself in this position, you should always go with a partner with a track record recovering commercial debt with a service you can rely on.