The easy and professional ways to get clients to settle an invoice on time

Les Roberts, Senior Content Manager at Bionic
By Les Roberts, Senior Content Manager

No matter what business you’re in, getting paid on time should be the universal rule. So, why is it any different when it comes to client invoices?

Companies of all sizes rely on client payments to cover their business expenses, and failing to pay on time can be the difference between keeping your business afloat or barely scraping by.

To help you settle an invoice with clients on time — and in an easy and professional manner — our handy guide is here to help you make sure you always receive your payments when they’re due.

What is an invoice?

An invoice is a document that’s sent by a seller to a buyer after they purchase goods or services — this is both as a means of recording the sale and requesting the payment.

Essentially, an invoice declares in writing:

  • What the client has purchased
  • When they purchased it
  • The quantity that was agreed upon
  • At what price

Without an invoice, it’ll be hard to prove the means behind the purchase, as well as the proof of payment.

A business owner looks through his invoices while working out his businesses energy bills

What is the purpose of an invoice?

Invoices are legal documents that create a binding agreement between you and your client. This means that you legally have to provide the product or service and they legally have to pay at the agreed-upon time.

As a result, invoices are especially handy when it comes to taking more formal actions — especially in the cases of missing or overdue payments.

What’s the difference between a bill and an invoice?

While you might not think it, there actually is a difference between a bill and an invoice.

A bill is usually more immediate than an invoice, with the sender providing the bill quickly and also requiring a prompt payment — typically without the option of payment terms. Essentially, a bill requires immediate payment, while an invoice is a set payment to be made at a later date.

Why is it important to keep up with your customers and clients?

Keeping up with your clients and customers is important because you deserve payment for the services that you provide. Regular check-ins to update on work or the status of their order is beneficial as it allows the client to actively engage and keep up to date with what exactly they’re paying for.

It’s also important for you to keep up with your clients regularly regarding payments to promote and maintain good habits — after all, if you don’t talk to your clients, how can you expect prompt payments?

How to ask for payments from clients

Although it can sometimes be uncomfortable to ask for payments, it is what you’re owed at the end of the day. Part of the problem could lay in the fact that ‘asking’ sometimes feels like you’re requesting something that the other party either has to accept or deny — even though the client has already agreed to the terms of your contract. However, in order to receive what you’re rightfully owed, you can take this three-step approach:

  • Be professional — Be assertive and straight to the point. Don’t waste time when discussing an overdue payment.
  • Be polite — Remain calm and don’t yell or accuse your client of deliberately missing a payment. Be polite and friendly to ensure you can get the best results from the call.
  • Persistence — Continue reminding your client in a calm manner that the payment needs to be made by X deadline or that they have an overdue payment. If they have a reason, let them explain it and take it from there.

How to get clients to make payments on time

To help you get clients to make payments on time, here are some simple steps that you can follow.

1. Establish payment expectations early

To ensure that there’s a shared understanding between you and the client, make sure that you establish payment expectations early.

The best way to do this is to create a payment schedule that should include how much the client's monthly retainer is and the date they’re expected to pay each month. This can easily help to reduce confusion for both parties about the amount in total and when your client needs to pay — plus it also helps to build a strong relationship and healthy communication.

2. Determine who you should send the invoice to

Ask your client who in their organisation is in charge of accounts and subsequently to whom the invoices will get sent. This helps reduce the risk of an invoice going to the wrong person and the payment being missed.

Make sure to verify the information and ensure that the person you’ve been put in contact with knows what to expect from you including:

  • How often you’ll be in contact
  • The deadline for payments to be made
  • How much they’re expected to pay

3. Create a contract

Once both parties have agreed to the established payment expectations and the point of contact, it’s time to create a contract.

This should include details like:

  • What the product or service is
  • How much the client owes each month and the overall total
  • When the payment is due each month

You also need to make sure that you include information about late fees and overdue payments. Review the contract with the client and ensure that they sign it before you begin any work.

4. Send reminders about any upcoming invoices

The best way to make sure that you get paid on time is by sending reminders to your client in a friendly manner about an upcoming payment.

This helps to ensure that all payments are made on time and you always have proof in case there’s a dispute between yourself and the client.

5. Send invoices on time

Based on your contractual agreement, make sure that the invoices are sent on time from your end. Failure to send them out in time could mean that your client sends the payment late as they’ve not been made aware of the invoice for that month.

6. Follow up with clients

Once you’ve sent over the invoice, be sure to notify the client. You can always send them a gentle reminder to pay the invoice closer to the due date, and send them another reminder if the invoice is past due but within a grace period. A grace period is a set amount of time a payment can be delayed without a penalty being imposed, so make sure this is the contract if you’re wanting to put one in place.

If you’ve chased and sent reminders to no avail, give the client a quick call to work out what this bump in the road means.

What do you do when a client doesn’t pay?

There can be a wide range of reasons why a client doesn’t pay on time; it could be financial reasons, internal issues, or even simply slipping their mind. But, what should you do when the deadline has passed and the invoice still hasn’t been paid?

1. Issue a friendly email reminder

With how fast-paced life can be, it’s no surprise that sometimes things can slip people’s minds.

Your first step can be to send a friendly reminder email and just double-check that everything is ok with your client. Remind them that their payment is due, and ask if there are any reasons why the payment is late; they could be dissatisfied with the service you’ve provided or could even be having money troubles.

2. Offer a compromise

If you’re still struggling to receive payment, you may consider offering a compromise to your client. If they’re having financial troubles, for example, you can offer to split the payments into more manageable smaller chunks so the payments are more affordable.

3. Try invoice factoring

Invoice factoring is a way for businesses to find cash flow by selling their invoices to a third party. It can be provided by either independent finance providers or banks.

Invoice factoring is great for when your company needs a cash injection and you’re not having much luck with acquiring your invoice from the client. Usually, you’ll sell around 70 to 90% of its full value and this way you won’t have to worry about collecting the payment firsthand.

4. Consult an attorney

If invoice factoring isn’t for you and you’ve still not received the payment from the client, consider consulting an attorney. Taking legal action may be your best bet, especially if you’re owed thousands of pounds. Make sure to cease all work for the client before you consult the attorney.

How to ensure that you get payments on time

No one wants to chase a client for payment, but it does happen. Fortunately, there are some simple tips that your business can follow to help speed up the process.

Offer incentives for quick payments

Offering a discount may encourage clients to pay you earlier. For example, you could offer a 10% discount if the client pays within 20 days instead of 30.

Discounts may only be worth it for clients for consistently paying late and if they’re hurting your cash flow.

Charge late fees

If a client has missed a payment for no good reason, charge for late fees or missed payments.

As most clients won’t want to have to pay more than they have to, late fees can help ensure clients pay on time. But, make sure to include this policy or terms of service in your contract that you review with the clients.

Stop services if you don’t receive payment

If you continue to not receive any payments, stop your services immediately. Don’t resume services until the client pays the invoice and any fees that they may owe. Once these have been paid, make sure to have a discussion with the client about how to avoid this again in the future.

Is it illegal to not pay an invoice?

If a client refuses to pay an invoice — regardless of the reason — you can take legal action against them in order to recover the debt.

Typically, before legal action is taken, you can send a Statutory Demand for the outstanding amount that the client needs to pay. A Statutory Demand is a formal written request that a debt must be paid and any individual or business who receives a demand has 21 days to; settle the debt, secure the debt or reach an agreement for payment.

How Bionic can help free up time for busy business owners

Settling an invoice with your clients can sometimes be an awkward and challenging process, but you need to be paid for your services. From what to do when a client doesn't pay to the methods of getting clients to pay on time, invoice financing is a must for your business to keep its head above water.

Although we can't help with getting your invoices paid, we can help free up time when sorting your business essentials. This is time you can put back into running your business, including chasing up invoices.

Speak to the Bionic team today to find out more about business Insurance, business energy, or business phone and broadband. We can even help with business loans. Or check out our handy guides to help you with all of your business needs.