From time to time, you are going have a client who doesn’t pay their bills on time, or who may try to avoid paying them at all. A few will have genuine financial problems, which your team should have picked up on when doing due diligence to ensure they were creditworthy.
A greater percentage will have the ability to pay any amount of money you could possibly bill them, but they won’t pay because they are unwilling to give you the money—preferring to hoard their cash and slow-pay their vendors. A small number may have lost the bill or invoice or decided to challenge it.
Whatever the reason, you may be asked to help your team collect the money your client owes the company, even though you don’t believe you should have to ask for the money, and even though you are concerned about your working relationship. But it is your client, and you do have relationships in the company. If you want your team to take care of your clients for you, you need to take care of your team by helping when it is necessary.
What follows is a plan to collect that money and retain the client.
Ask Confidently and Directly
There are two viable ways to start this conversation, so use the one you think works best in your situation. The first approach is to start with your primary contact, the one with whom you have the strongest relationship, while the second is to go directly to their accounts payable (AP) department.
Many of us who have had to collect past due bills prefer to start with our main contact, because we have a relationship and have made the necessary deposits to easily ask and obtain their help. Others prefer to keep their sponsor out of the conversation at first, so they can save the goodwill they have accumulated for a more significant ask.
No matter who you decide to start with, ask for the money you are owed confidently and directly. Because your company has done the work, you are well within your rights to ask for the money you earned, based on the payment terms in your agreement. There is no reason to be apologetic or to feel like you are harming anyone by asking them to pay their bills. Just ask them politely and directly to pay what is currently owed.
Whether your first conversation is with your contact or their AP department, you may not want to provide the full contract to document the amount owed. You already have the moral high ground here: because you provided your solution, the money is owed to you. It doesn’t make sense to go to the contract straight out of the gate in that setting.
You should, however, provide an aging statement that shows what is due, as well as what is past due. Highlighting what is owed and indicating how many days it is past due allows you to specify the money that you need to collect. Show them the exact amount they need to pay, ask them to make the full payment, and suggest that you will take an ACH payment or a wire transfer.
Refer to the Terms of Your Agreement
Even though you may not pull out your full contract, it does help to refer to the terms of your agreement. If the deal was finalized by your client’s purchasing department, your main contact may not be aware of all your contract terms.
When referring to those terms, point out that one of the ways you keep your pricing competitive is by collecting clients’ payments with the terms, something that is made more difficult when you have to borrow money through vehicles that require interest payments. By doing so, you are showing why it is necessary to collect on your invoices when they are due—and tying it to your pricing.
While you are not threatening to raise your price here, this move does introduce the idea that longer payment terms will require higher pricing, something that may be true in the future.
Ask to Be Prioritized
If what you sell is important to your client, your client may be able to prioritize your payments due to the nature of what you sell. You may not know this, but your clients probably already prioritize some of their partners. This happens most often with partners who would cause service failures (on the client’s end) if they stopped their services abruptly, but it also applies to other companies that call and negotiate priority payments.
You can ask to be put on the list of companies that get paid at the thirty-day mark if that’s in your terms, but nobody will put you on that list automatically. It’s helpful to explain to your contact or their AP manager that after thirty days has passed, you will expect a check every week, if you bill them weekly.
You want to negotiate that agreement now, so you don’t have to repeat the process with your next invoice.
Thank Whoever Helped You
Through all of this, you want to be diplomatic. You are trying to solve a problem, and you should focus on resolving the issue. When you have solved the problem and are sure you are being paid, make sure to thank whoever helped you.
You should never feel bad asking for the money your clients owe you. When you have created value for them, and they have benefited from that value, you are entitled to capture your fair share of the value, which means being paid for your work. Your best clients will never delay your payments, because they appreciate your partnership and the results you help them produce.
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Filed under: Sales