When you’ve done the work, you should get paid. It’s as simple as that.
If you want to get paid quicker, this article will show you 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.
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, this is what many service providers face. From painters, freelance writers, plumbers, graphic designers, electricians and many more, lots of service providers get paid after they provide a service.
These businesses often struggle to maintain cash flow.
If this sounds like you, perhaps you haven’t built a strong payment timeline into your business dealings, maybe you’re not sure how long to wait before following up with a payment request or you just don’t know how to word the payment reminder without sounding rude or needy.
Want to get stuck into the template letter?
Run the numbers & check your details
- Was the invoice you sent correct?
- Did you actually send the invoice?
- Has the correct person received the invoice?
- Did you post or email the invoice to the correct address?
- 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?
Solid payment terms
Have a set timeline for payment
Hi! Hope you’re well. Just following the invoice sent on 15 June to email@example.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 are well and the 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!
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 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.
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)
If you hate chasing up payments, the best defence is a good offence.
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?
P.s. The Australian Government has lots of help for small businesses including around payment demand letters.