Chasing unpaid invoices sucks: Collect debt like clockwork
Chasing unpaid invoices sucks. It’s soul-destroying. You’ve completed the job in goodwill, only to end up the bad person when trying to recover outstanding payment from the customer. They’ve given every excuse under the sun. Now what?
This infuriating situation will resonate with most trade business owners. While it’s know an age-old problem, when cashflow is tight and you’ve got your own bills to pay, you’ve got to stick to your guns and learn to collect debt like clockwork.
Emotion can get in the way of taking practical steps to collect your debt, including putting measures in place to reduce the chance of it happening again. Still, it makes us all feel better that we’re not experiencing these frustrations in isolation.
Here is how we’d suggest you tackle the debt-collection process.
Procrastination is a curse
Many trade businesses are run by enthusiastic husband-and-wife teams. In our experience, some wives/partners end up in her husband’s trade business by default. ‘She’ leaves her own career to take up a Jill-of-all trades gig alongside her partner.
Initially, this scenario makes perfect sense. However, as time marches on, these good intentions can start to unravel. The process of debt collection is a major contributing factor. ‘She’ becomes resentful about being chasing unpaid invoices.
Typically, procrastination creeps in. It is a natural reaction when the ‘she’ is not sure why debt collection is her responsibility in the first place! The fact hubby or partner is not invoicing fast enough fuels the fire. This is never going to end well.
The answer is straightforward: get a debt collection process in place.
Persistence pays off
When was the last time you reviewed your internal procedures and documents? We’ve previously compiled a helpful list of debt recovery do’s and don’ts, which includes the big ‘ do’: establishing and executing debt collection policies.
Once you’ve got your processes in order, mastering the art of debt collection will rely on your personal communication skills and persistence. There is no scope for unprofessional behaviour – never stoop down to the debtor’s level.
Always remain friendly in your communication. Bear in mind the famous phrase of former First Lady, Michelle Obama: “When they go low, we go high”. This means, your response should reflect the solution you’re hoping to achieve.
Getting angry may feel good in the moment, but it’s not going to move the ball forward. Those who stay friendly and persistent are more likely to get paid.
Collect money on the spot
Most often, trade businesses send invoices after a job is complete. In the chaos of juggling the demands of a running a trade business, the customer may not receive a timely invoice from you. By this stage, you’re out of sight, out of mind.
While the customer knows they owe you money, your invoice is not high on the priority list. And so the debt-collection cycle begins. Wouldn’t it make more sense to invoice on completion of the job, before you’ve even left the site?
Integrating job management software into your trade business will allow you to invoice and collect on the spot, without the hassle of any follow up. Jobs can be converted into invoices when you or your team is in the field.
Chasing money is no one’s idea of a good time. Free up your time to focus on profit-making activities that will improve your cash position in the long term. If you’re stuck on how to get started, register now for our live, one-day Next Level Tradie events.