7 min read

There are countless problems that plague small businesses, but few are more potentially damaging than late payment. The late payment epidemic isn’t new or unheard of, particularly here in the UK, but even in 2019 it’s still very present and very dangerous. In November 2018, Xero’s latest research showed that the average UK small business is owed £24,841 in late payments on any given day. And that the knock-on effect of poor cash flow contributes to around 50,000 business failures every year.

But getting invoices paid on time isn’t some mythical beast. There are tried and true best practice methods businesses (or their accountant or bookkeeper, if they’re offering a virtual credit control service) can employ to maximise their chances of being paid on time. While we’ve seen around 80% of invoices can be collected on time via email chasing alone (see our 4 most effective email templates to get invoices paid), that still leaves 20% that need further input. The best weapon in your credit control arsenal for this is phone calls.

When does an unpaid invoice need to be chased via phone call?

Phone calls are valuable in a variety of situations, however there are naturally some customers who respond to it better than others. You know your customers better than anyone else, so always use your judgement on a case-by-case basis as to whether a phone call is the right move. With that in mind, there are 3 situations which we believe always warrant a phone call:

1. No favourable response after 3 email chasers. You’ve been asking for an expected payment date, or for a reason why an overdue invoice remains unpaid, for 3 emails in a row now. If you haven’t had a satisfactory answer, it’s time to follow up with a phone call.
2. No response at all after 3 email chasers. Much like the above situation, but worse. If you’re sending email chasers at a reasonable pace and have been entirely ignored for 3 in a row, a phone call is definitely warranted.
3. To impose a sense of realism, e.g. if threatening legal action. If you have a particularly difficult customer to get payment out of and it’s come to taking severe action to get the invoice paid, a phone call will help ground them and see the reality of the situation. (Of course, this phone call should not replace delivering them the same info in writing - it enhances that message.)

Before you undertake a phone call

Before you dial a customer’s number to follow up on an unpaid invoice, there are a few preparatory steps to undertake.

Firstly, prepare yourself mentally. Being asked for money, especially when it’s rightfully owed, puts your customer in an awkward position - they may find themselves struggling to justify the unjustifiable. As long as you maintain a sense of polite professionalism, and deal only in facts, the conversation cannot spiral into an aggressive, emotional, or personal place. (Which will only serve to further harm the relationship with the customer - even if they were the ones who “started it.”)

Next is to have all the necessary info in front of you. This should include:

• Invoice reference number
• Goods / services the invoice is for
• Invoice issue date
• Number of days overdue (if applicable)
• Notes of communication had so far
• Who to talk to (or if you don’t know, ask for Accounts Payable)

Finally, keep the objective in mind. The phone call isn’t just to make the customer feel bad because they haven’t paid on time, or aren’t responding to your emails. In most cases, you want to achieve one of three things:

1. Resolve any disputes
2. Establish an expected payment date
3. Remove any hurdles to payment

You want to keep this in mind to make sure you satisfactorily achieve your objective before you hang up the phone.

The 6 phone scripts

When you get on the phone with the customer, looking to achieve one of the above objectives, you will run into excuses. If they thought everything was fine, they would’ve paid (or responded to your emails) by now. Below are the 6 most common excuses you’ll hear and how to best handle them to achieve a favourable outcome.

During these calls remember to understand, empathise, and negotiate with the customer. You’re dealing with a human being and that requires tact, even if they aren’t being a good customer. If you come into the call demanding, interrogating, or dominating, you’ll put them on the defensive, making it more difficult to collect payment and possibly losing them as a customer in future.

Excuse 1: They forgot to pay

Customer: My apologies, I got busy and forgot to pay.

You: Thank you, I understand that can happen. Now I have you on the phone are you in a position to make a payment now?

Customer: I’m a little tied up right now, I’ll do it today or tomorrow at the latest.

You: Not a problem, I’ve made a note in my system to reflect the promised payment and we’ll look forward to receiving it. Have a great day.

Excuse 2: The invoice is incorrect

Customer: I’ve not yet paid as the invoice is incorrect.

You: I’m very sorry to hear that, could you please explain what the problem is?

Customer: (Explains issue)

---- If the customer is correct ----

You: Apologies and thanks for explaining, I’ll have that looked into right away. I’ll issue an updated invoice as soon as this has been resolved. I’ll be back in touch shortly.

---- If the customer has misunderstood ----

You: Thank you for explaining, however there seems to have been a misunderstanding. (Explain the misunderstanding). We’ll endeavour to make this more clear in future, however for now this invoice remains due. Let me know if there’s anything I can do to help facilitate payment.

Excuse 3: They didn’t receive your invoice

Customer: This is the first time I’ve received this invoice.

You: Apologies if that is the case. Could you please confirm that your email address is xxxx@xxxx.com?

Customer: Yes, that is correct.

You: Great, thanks for clarifying. We have sent emails regarding the payment of this invoice to that address, and they are all sent with an invoice copy attached. So please do check your spam in case they’ve gone in there by mistake. With regards to this invoice, are you able to settle it now over the phone?

Customer: No, sorry, I don’t have access to my card. I’ll put it on this Friday’s run by BACS.

You: Brilliant, I’ll make a note in our system to expect payment by Tuesday when the BACS payment clears. Thanks for your time.

Excuse 4: The invoice hasn’t been approved

Customer: Unfortunately the invoice has not yet been approved by my director.

You: Sorry to hear that, I know these things are sometimes out of your control. Has there been a query with the invoice for it to be left unapproved?

Customer: Not to my knowledge, no.

You: In that case, is it possible to request that this is approved today? The invoice is now overdue. If your director has any queries at all, feel free to contact me by phone or email.

Customer: She’s not in the office right now but I’ll do my best to reach her.

You: Thanks, I appreciate that. I’ll check in with you soon. All the best.

Excuse 5: They’re out of the office

Customer: I’m not in the office right now so I can’t make payment.

You: Not a problem, I understand you must be busy. We can accept card payment over the phone if that would make things easier?

Customer: No, sorry, I’m driving. I should be in tomorrow. I’ll pay it then.

You: Thanks for that, we really appreciate it. I’ll make a note to expect payment then. Have a nice day.

Excuse 6: They already paid the invoice

Customer: Why are you calling me? I already paid this invoice!

You: My apologies, I’ll check our system and see why this wasn’t marked as paid and make sure it doesn’t happen in future. Do you know when this was paid?

Customer: Some time last week, I believe.

You: Thank you, I’ll look into this right away for you. I’m sorry to disturb you. Have a nice day.

After the call

Once the call ends, always make note of the date, time, who you spoke with, and what was said or agreed. In some cases, further email chasing or phone calls may be necessary and being able to quote back what was previously agreed, and when, can be key in keeping the customer on track to pay. Both now and in future.

Once the customer pays, don’t forget to thank them for paying. And if they’re starting to develop a trend as a late payer, try adjusting your email chasers going forward to better your chances of being paid on time in future.

What next?

If you own or work in a small business and want to have invoices paid on time more regularly, we’ve consolidated years worth of professional credit control experience into one handy resource: The Ultimate Guide to Credit Control. Download your copy for FREE today.

If you’re an accountant or bookkeeper, pass that guide along to your small business clients that struggle to get paid on time. Or better yet, take a look at how other firms, ranging from the new and progressive through to the UK’s Top 20, are using Chaser to gain and retain clients. Read their stories here.

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Header image modified from photo courtesy of Ehimetalor Unuabona via Unsplash.