Collecting payments from customers seems like a pretty straightforward process. You send out an invoice with all the appropriate details, and voila, your customer sends back payment in time for the due date. That’s how it works, right?
In an ideal world, yes, customers would all make payments in a timely manner. Unfortunately, they don’t always pay on time – or at all. A recent study cited on CFO magazine reported that 49% of financial professionals didn’t pay corporate invoices due to lack of information, out of a total of 10,000 invoices that were at least 30 days overdue.
There are plenty of other reasons people and businesses don’t pay invoices, and one of them is the lack of proper follow-up. As in the example above, some businesses expect to send out an invoice once, receive payment, and forget about it.
That one invoice notification is not enough. Paper and email invoices can get lost, even with the best of intentions. So what should businesses do to stay on top of payments? Create an invoice follow-up strategy that will reduce late payments and minimize manual effort.
To start, assess your current invoicing landscape.
What types of business processes are taking place relative to invoicing? Are you using an online invoicing platform, sending out invoices once, and following up only after invoices are 30 days late? Maybe you’re still mailing out paper invoices with at least one reminder in place before you start calling customers.
Whatever the case, make sure you understand exactly what’s happening today before making any decisions about what to change. And if you have access to any bulk invoicing data, calculate key collections metrics like Days Sales Outstanding (DSO) and your Collections Effectiveness Index (CEI). Both measurements will show you where you might need help in closing the invoice-to-payment gap.
Related: Measuring collections: use these 2 metrics for a quick snapshot
Consider the timeline for invoice follow-ups.
Think about how much of the invoicing follow-up process you’d like to manage via email and when you’re ready for phone calls. You may choose to manage everything up to the invoice due date and then trigger a staff member to start calling, or you may want to send a few more reminders and start calling 14 days after the due date. Decide on the timeframe that’s right for your business now, but don’t feel tied to it. This timeframe can change if you see a need to shorten (or lengthen) it after trying it out for a few months.
Plot out an invoice follow-up schedule.
So you have your invoice follow-up timeline. Let’s say it starts with the date you send the invoice and ends 14 days after the due date. What’s the frequency of your invoice reminders? Here’s a sample schedule:
- Initial send of invoice (date variable)
- Reminder 7 days before the due date
- Reminder on the due date
- Reminder 7 days after due date
- Reminder 14 days after due date
If you offer products or services that require upfront payment, you may want to send more than one reminder before the due date. Yes, the onus is on the customer to pay the invoice. But, multiple reminders may help you avoid uncomfortable situations where payment is due before products or services are delivered.
Write up a series of email templates for each reminder date.
This part might sound like a lot of work. In reality though, you just need to write one reminder template and modify it slightly based on the reminder date.
In writing these templates, make sure to stay true to the language you use throughout your website, marketing materials, and any other customer-facing communication. It’s important for customers to have a consistent brand experience in every area of your business. If your business tone is formal, keep invoice reminders formal. If you are more the light and casual type, make sure invoice reminders reflect that tone.
Related: Write Invoice Emails That Get Paid
Use automated invoice chasing to reduce manual effort.
You’ve built the framework for the invoice follow-up process, and you might be feeling a bit overwhelmed. Now you have to figure out another reminder system: one that reminds YOU to send the invoice follow-ups.
Fortunately, there are online invoicing platforms available that offer automated invoice chasing. These platforms allow you to configure a series of emailed reminders to send automatically on specific dates. All you have to do is set the timeframes and enter your email templates, and the invoicing platform takes care of the process for you.
Related: Automated Invoice Chasing Guide
An invoice follow-up strategy is critical for timely payments.
Following up on invoices might not seem like an important part of your business – until customers stop paying their bills. Some careful planning ahead of time will help your business avoid spending precious resources following up on late payments.
Automated invoice chasing is a key differentiator of the Invoiced platform. Take a look at our docs to understand the full set of features. Or, contact us for demo to see how our invoice chasing functionality can support your business’s invoice follow-up strategy.
