Sooner or later, every AR team has to reckon with unpaid bills. But don't worry, you're not alone. Global debt has hit a record $300 trillion, as estimated by the Institute of International Finance. The $300 trillion is equivalent to 349% of global gross domestic product (GDP). That's a lot of money. And it can be tough to keep track of all those unpaid invoices. That's why sending a payment reminder is important as soon as possible.
But how do you best create and send these reminders?
Not to worry. Billtrust has curated these 11 tips so that you'll be well on your way to getting your accounts receivable paid in no time.
1. Choose the right communication channel
Before you think about the content of the payment reminder, think about which medium you want to use. Different generations sometimes use different ways of communicating.
Here are a few tips for selecting the communication channel that will get you to get paid quickly and efficiently:
- Start with email: Email is a great way to send payment reminders because you can blast out a bunch of them at once.
- Follow up with SMS: Send a text message if an email still needs to get the job done. Sometimes a gentle nudge is all it takes to get someone to pay up.
- Try a letter: If all else fails, you can always send a good old-fashioned letter.
- Give them a call: When all else fails, pick up the phone and give your client a call. A personal touch is sometimes the best way to get someone to pay.
2. Choose your message and tone carefully
It's no secret that chasing payments can be a major pain point for businesses. In fact, according to Intrum, chasing late payments costs European businesses €275bn a year and takes the average firm 74 days to resolve. Not only is it frustrating to deal with clients who don't pay on time, but it can also strain your cash flow seriously.
One way to help ease the pain of chasing payments is to send professional and polite reminders. Of course, you'll want to avoid coming across as nagging or threatening, but you also don't want to be too casual about it. After all, this is still a business transaction.
Every day, companies and employees are inundated with communications. Therefore, your payment reminder should stand out and you must give it your own style. A personal style increases recognition and prevents your reminders from ending up in the spam folder or trash.
Here are a few tips to keep in mind when crafting your payment reminders:
- Keep it short and sweet: No one wants to read a long, rambling email (or worse, a letter) from their accountant. Get straight to the point and tell them what they need to do.
- Use friendly language: Even though you're reminding them of debt, there's no need to be overly formal or stiff. A little bit of warmth goes a long way.
- Use humor wisely: A little wit can also help your message be more palatable. But beware - humor can backfire, so use it sparingly.
- Be clear about the consequences: If you need to call or send certified mail, make sure they know that upfront. This will help them understand that you're serious about getting paid.
- Change your communication style over time. The first communication is ideally collaborative in tone. Further along the process, communication can be more targeted and direct.
3. Show empathy
As an accounts receivable professional, one of the most important things you can do is stay on top of your accounts receivable. This means sending timely payment reminders to clients and doing so in a way that shows empathy and understanding. After all, late payments can be the result of many factors, including simple forgetfulness or unexpected financial difficulties.
Here are a few tips to highlight your empathy:
- Use language that shows you understand their circumstances. For example, instead of saying, "you forgot to pay your bill," try, "I know things have been tough recently, so I just wanted to remind you that your payment is due."
- Offer flexible payment options. This shows that you're willing to work with them to find a solution that meets their needs.
- Be patient. Sometimes it takes clients a while to get caught up on their payments. You'll build trust and goodwill that can last long into the future by showing patience and understanding.
4. Be short and to the point
If you're like most AR heads, you know the importance of getting paid on time. But sometimes, even the most well-intentioned clients need a reminder. Here are a couple of tips to help you write payment reminders that are short, sweet, and to the point:
- Be clear about what you expect. It makes no sense to cover several pages or write an endless email when sending a payment reminder. This is not only unnecessary; it discourages fast and direct payment. Include the amount owed, the due date, and any late fees that may apply.
- Offer a brief explanation of why timely payments are important. For example, you might mention that late payments can negatively impact your business’s cash flow.
5. Vary the content of the subject
We've all been there - staring at an empty inbox or portal, wondering where the next payment is. If you're in charge of sending payment reminders to clients, it's important to vary the content of your reminder subject lines so that they stand out in a sea of emails.
Here are a few tips:
- Get personal: Instead of generic subject lines like "Payment reminder," try something more personal, such as "Thinking of you, hope everything is going well."
- Be specific: State the amount and purpose of the payment in the subject line so there's no confusion about what you're asking for.
- Be creative: Use puns or playful language to grab attention and make your email stand out. On the other hand, make sure to be relaxed - you want to make sure to satisfy your clients.
- Don’t: It is best not to mention that this is a first or second payment reminder in your mail. Why? Because clients will then expect further reminders to follow and will postpone payment even further.
6. Share the billing information
Reminding your clients to pay their bills is a challenging task. It's even harder when you're unsure how to go about it. At a minimum, mention the following information in the reminder:
- The invoice number
- The invoice date
- The original due date
- The new latest payment date or a specific payment deadline for the invoice
- The outstanding amount
- The account number to which the invoice must be paidchoose
Even better is when you provide the invoice in question. Then all the necessary data is accessible to your customer and he or she knows exactly what you are talking about. Establishing a buyer portal is a recommended practice that centralizes invoices, payment details, and offers flexible payment methods for enhanced convenience.
This way you avoid the typical excuse that a customer can no longer find the original invoice, which enables them to decide when (and whether) to take action.
7. Provide a payment link
The goal of a payment reminder is to get your customer to pay, but they are only effective if they make it simple to pay. Include a payment link in your payment reminder so they can pay you right away.
It's simple: the easier you make it to pay, the more likely you are to get paid. So save yourself some time and money by including a payment link in your next payment reminder. Your bank account will thank you.
8. Use the email address of a real person
When it comes to important matters like payments, it's always best to deal with a real person. Using a real person's email address makes you more likely to get their attention and ensure they see your message. Plus, it feels more personal and human, which can make all the difference in getting someone to take action.
So next time you remind someone to pay up, use a real person's email address. It could make all the difference in getting your payment on time.
9. Highlight the benefits of your product or service
As any business owner knows, getting paid is essential to keeping the lights on. But sometimes, even the most responsible clients need a little nudge to stay on top of their invoices. That's where highlighting the benefits of your product or service helps remind your clients of why they love doing business with you in the first place.
For example, add a PS at the bottom of the email to include the following
- The announcement of a new feature
- A link to a customer success story
- A link to a blog
When clients are reminded of the value they receive from your company, they'll be more likely to prioritize payment. So next time you send out reminders, consider how you can turn a simple request into a positive reinforcement of your company's value. As a result, your clients are happy to pay up.
10. When do you send the payment reminder
One of the most challenging (and often thankless) tasks for AR professionals is chasing down client payments.
While it's difficult to strike the perfect balance between being persistent and respectful, there are a few general guidelines you can follow to create effective payment reminders:
- First, timing is everything. You don't want to send a reminder too early, as this could give your client the impression that you're pressuring them for payment, but you also don't want to wait too long, as this could make it seem like you're not taking the situation seriously.
- Secondly, be clear and concise about deadlines. This is not the time for small talk or pleasantries - get straight to the point so your client knows exactly what you're asking for and when.
- Finally, be polite but firm until you receive payment. It's important to maintain a professional demeanor, even if you're feeling frustrated or angry.
By following these tips, you can create payment reminders that are both timely and effective.
11. Automate payment reminders
Late payments are the bane of every small business owner’s existence. Fortunately, there’s a simple solution: automated payment reminders. By setting up automatic reminders, you can take the headache out of chasing down late payments. And, best of all, you’ll actually get paid faster.
Automated AR software-generated reminders can be sent via email, text, or push notification, so you can choose the best method for you and your customers. You can even customize the messages to include personal touches that will incentivize your customers to pay on time. So if you’re tired of chasing down late payments, automate your payment reminders and get paid faster.