None of us are perfect. We forget things. Birthdays, anniversaries, putting out the garbage when you promised only that afternoon that you would do it but you went and forgot and life has been made hell ever since – we’re capable of forgetting just about anything.
So, when a payment date is overlooked because, well, something far more fun came along and pushed it out of the way, we can perhaps extend a little understanding. We might even be able to forgive a little deliberate delay, especially when times are tight and everyone’s a little stretched.
However, no matter how great our powers of understanding, we can’t avoid the maxim that bills must be paid. Otherwise, we’re just doing it all pro bono, which is lovely in theory but more than somewhat impractical when it comes to profit and loss. So, what do you do? You get hold of a payment reminder system.
We’ll look at what they consist of, before itemizing some of their more useful characteristics.
What’s the big deal about late payments?
Late payments are a pain. They distort the financial picture by rendering forecasts inaccurate and introducing crater-sized potholes into the cash flow process. OK, that’s bad, but surely not that much of a problem. I mean, a little lateness never amounted to much, right? Better late than never and all that, yeah?
Well, it may surprise you to learn that late payments are estimated by the World Bank to cost the global economy over $40 billion every year. This is due to lost opportunities when capital is tied up elsewhere and the resource cost of having to chase these payments up.
It’s difficult to envision a figure like the global cost one we’ve just mentioned, so how about this one?
If half of all B2B invoices issued in the US are paid late, that means that the average B2B company could be improving matters in this area by 100%. This could mean that the finance is put in place to pursue projects or hire key staff, and resources don’t have to be diverted to the wasteful activity of chasing late payments.
Let’s see how this might be achieved.
Payment reminder systems – what are they?
OK, it’s not going to shake your world to its foundations to discover that payment reminder systems are there to take the hassle out of chasing payments by issuing reminders to late payers.
If you choose your accounting product wisely, you’ll be able to find a system that assists you with estimate and invoice creation.
The client will be given all the information they’ll need to expedite payment, such as the amount due, what it’s for, any purchase order and invoice number information, and of course your company’s payment details. Quite often, queries regarding such areas, honest or otherwise, can delay the successful completion of payment.
The templates you can use can vary from funky to maybe more classic, like this example.
Then, when it comes to payment reminders, these can be programmed to issue at set intervals, from advice that a payment date is approaching, to polite requests once the invoice is due.
You can word them according to your brand style, so that the customer journey remains consistent. You may want to experiment with tone, to see what works most effectively in terms of securing payment. You will probably be well advised to calibrate your tone when it comes to handling those customers who seem resolutely against paying up. Cozy familiarity is not always the best option.
So, now we know what we’re talking about, let’s see how they can help with ensuring on-time payments.
1. Improves brand profile
Customers like to see an organization with its act together. This is true of all kinds of activities, from domain name to sales to support, and certainly includes payment chasing.
A smooth and professional payment reminder system, issuing timely advance warnings of payments due, as well as follow-up messages as time wears on, will gain a customer’s respect and timely payments are more likely to result.
Much more so than would be the case with a ramshackle series of phone calls, say, from different individuals who are not quite sure if and when a customer’s been informed already about the payment outstanding.
Using a payment reminder system helps a company maintain a consistent image throughout its activities. This helps promote authenticity, and this in turn is crucial in attracting customers.
2. Multi-platform performance
A good payment reminder system will be open to operation from your PC of course, but also whatever other device you favor. This can be enormously helpful when you’re out in the field and you realize that a payment is still outstanding, a payment that will transform your financial health and make something amazing possible.
By being able to chase payments via your mobile device, you can ensure prompt payments, just when you need them. You can also access reports by cell phone or tablet too, so you can have the most up-to-date information at your disposal, wherever you happen to be.
3. Reports when you need them
Another key deliverable is a good reports facility. This can be tremendously helpful in terms not just of establishing which payments are outstanding, but also of how a given client has performed in the past.
If you’re dealing with a customer with a track record of late payment, they may need a little more attention than the average. You may even have to tailor your standard terms in order to keep them on the straight and narrow.
More broadly, reports can help you with keeping track of your ROI, your business performance by country, and so on. Some payment reminder systems may also offer commission tracking, which can be useful for sales teams and managers to keep track of their earnings and ensure they are receiving accurate compensation for their work.This kind of information can help inform decisions on where to look for new clients going forward.
4. Sometimes, late = never
Payment cards, particularly credit cards, are a massively popular way to make a payment. OK, you might prefer straight bank transfers, but there’s no denying that a credit card’s convenience and deferment can make it an enormously attractive choice. This is why they’re responsible for carrying out such a high level of economic activity.
If a client uses a credit or debit card to clear their outgoings and a delay is allowed to build up between service engagement and payment, their card can expire in the meantime. This can then incur all manner of complications, as another payment means is facilitated.
It’s this sort of eventuality that can result in extensive waiting for payment. Sometimes a business may end up feeling it’s not worth the chase, and the invoice gets written off. A valuable lesson about that customer is then hopefully learned.
You can do yourself a favor by never having to go there and never having to learn the lesson the hard way. Keep payments coming in nice and quickly and you’ll not have to face the expired card problem.
5. Automatic for the (late-paying) people
A great many businesses take an inordinate amount of time sending out invoices manually. Then, to make matters worse, they spend yet more time chasing up late payments, one client at a time, with piecemeal reminders, written with painstaking slowness by a harassed accounts team.
Absolutely no need. With a payment reminder system, you can set up automatic reminders, so that they go out in a timely and reliable fashion. No ‘did I forget to send out a reminder?’ doubts. It’s all taken care of for you. The efficiency gains can be huge.
You can carry on sending out manually for special clients if you choose. Most payment systems offer easy options for manual reminders, such as this example. Clicking on the bell icon opens up the manual invoicing routine.
Or you can use a mix of both. Whatever works.
Most businesses are accustomed now to omnichannel communication. For instance, a small business phone service provider, offers ways to contact customers that range from straightforward phone calls to messaging. Accordingly, customers can be reached via a means that suits them.
Similarly, you can set a payment reminder system to send out communications such as emails or texts, or a blend of both, to suit the preferences of the client. That way, you remove a possible excuse that some clients may adopt – the old ‘sorry, we just work with SMS around here’ ruse.
6. Contract details kept handy
There’s nothing worse than having to rifle through your documents in order to lay a timely hand on a contract. Sometimes, you need to get hold of a contract to check on the original invoice payment terms that were offered to the client.
It might be the case that a client is referring to what they see as a vague section of the agreement that could conceivably offer them wriggle room on a payment. Scupper that angle by having the terms available for your perusal there and then.
With a payment system that enables you to store all relevant information so that it’s readily accessible whenever you happen to be when you deal with a client, you can be sure never to be caught out by a slippery customer.
7. Offers personalization options
Treating the client as an individual can help with customer goodwill towards your company. Why? Because people like the tailored approach that personalization affords, that’s why. As long as you’re demonstrably using data that the customer has willingly offered up.
Personalization can mean simply using the name of the correct contact, the one who deals with the payments ledger. (Remember to ensure you have their name spelled right!) Or it might involve factoring in their preferred means of payment.
It might even, if you really want to go to town, involve mention being made of a factor that’s key to their industry. For instance, if it’s New York fashion week and you know your client’s involved, ask how it’s going. Maybe say that you appreciate it’s a busy time for them. Niceties like these can work wonders. Of such things are the most effective payment reminders made.
So, the important thing here is to acquire a payment reminder system that allows this degree of personalization.
8. Improves customer service
Hang on – ensuring prompter payment from people is a way of improving your service to them? What kind of topsy-turvy thinking is this? It seems odd on the surface, but it actually is a way you can be of assistance to your clients.
Customer service isn’t just about having the best websites, or the most effective sales agents. It’s everything involved in customer liaison, at any stage of their journey.
You need to bear in mind that a great many late payers aren’t paying late on purpose. They just lost track of time. Or they suffer from demand overload and kind of got overwhelmed.
For these people, having a handy up-to-date reminder of what’s owed, what it’s for, and where to send the payment is a tremendous boon as it saves the customer the time that they would otherwise have spent ferreting around their system trying to identify what’s currently due.
Show that you value your customer’s business by courteously reminding them of what’s outstanding.
Yes, getting that money in your account is paramount. But there’s another aim. You should secure the payment without alienating your client. Think about their lifetime value to your business and try not to put this at risk by clumsy or impersonal payment chasing.
Remember that the quality of customer service is extremely important to consumers and will have huge influence on their decision to buy. Admittedly, it varies in importance from sector to sector, but it has to be said that good customer service never goes to waste, especially in tech sales.
And it doesn’t end there. Never forget the knock-on effect poor customer service can have, with customers telling their family and friends about the experience. These are ripples you can well do without.
Consequently, ensure your customer service is up to par throughout all your dealings with clients, from initial marketing to invoice pursuit.
It’s been found that, just as poor customer service puts people off, great customer service keeps them keen – 94% are likely to do repeat business with a company showing that they care about the customer. Make sure you’re one of the good ‘uns.
Every interaction is an opportunity
Touchpoints with customers are precious commodities. You have to make the most of each and every one of them so that they meet their potential. Payment reminders are every bit as important a means of impressing a customer as any other forms of contact you may have with them.
For this reason, you need to be sure that you have the best system in place so that your customers – and your business – will benefit from it. Because there’s one fundamental truth you can’t ignore: without the customer, there is no business. Even the late-paying ones.