5 Strategies to Prompt Customers To Pay Their Invoices On Time

Many field service businesses have to deal with some customers who delay their payments. The COVID-19 induced economic downturn has also increased the risk of late payments, leading to major cash-flow issues, which can bring down even the most efficient and busiest of enterprises. Atradius, a leading provider of trade credit insurance reports that in the US, 39% of invoices are paid late (more than 90 days due) because of which 51.9% of businesses lose the value of their B2B receivables. These accounts receivable facts prove that a large number of companies struggle to get their invoices converted to cash on time. It’s important for SMBs to push their customers to pay their bills on time. 
In this post, we’re discussing the top 5 strategies you can implement to encourage your customers to pay their invoices on time.

1. Invest in a Field Service Management Suite

A payment gets naturally delayed if there is a delay in raising the invoice. On top of this, any errors in the invoice will further delay the payment. The customer and the support agent have to go back and forth many times to resolve the ambiguity. By the time you clear the accounts receivable, a lot of days or weeks would have elapsed. 
This is where an integrated field service management software preempts such issues. An FSM suite does the following: 

  • Pulls in data from your quote; estimates the total number of hours worked and gathers other relevant information required for the invoice generation. 
  • Automatically generates an invoice as soon as the technician completes the work, and emails it to the customer.
  • Allows the technician to issue the invoice and collect the payment instantly. 
  • Offers the customer a choice of payment options, including electronic payment modes. 

A field service software allows you to keep the invoice format plain and simple. You can explain all heads and include dates of services done. This leaves no room for ambiguity. An FSM also pre-empts the customer from having to make a follow-up call to get clarity on the invoice.
Read more: Creating simple and quick invoices with ReachOut

2. Create Legal Contracts

Businesses that work without a contract run a huge risk. A contract obliges the customer to make the payment on time. It’s important to include the invoice payment clauses within the contract. 
Prepare a comprehensive standard-form contract and include it as part of every work order confirmation. 

  • Describe the project summary, the cost, and the time to make the payment. 
  • Specify any penalty for delay in execution and force majeure clauses. 
  • Include a late payment fee. 
  • Co-opt a mutually agreed dispute resolution process.
  • Get the customer’s electronic signature. 
  • Be specific and leave no ambiguity in the contract.

3. Request Deposits, Part-Payments and Auto-Billing

The best way to receive prompt payment is to collect the money in advance. Specify the amount and terms of the deposit in the contract.
Often, the decision on deposits and part-payments depends on upfront negotiations.

  • For long drawn out projects, specify part-payment clauses, on reaching specific milestones.
  • Reward early payments by offering discounts or attractive terms.
  • For monthly or time-based payments, pitch recurring billing.
  • When credit is unavoidable because of competitive pressures or standard industry practice, run a credit check on the customer.
  • Be prompt in stopping services if the agreed-to payment does not materialize on time.

Read more: Key Ingredients of a Professional Plumbing Invoice

4. Make Proactive Follow-Ups

Despite the best of efforts, some customers delay payments, for varied reasons.
A field service management suite makes it easy to keep track of unpaid invoices. It automates reminders to the customer as well as the collection agent.
Reach out to customers with an outstanding invoice. Train customer service agents to seek payments in a firm, yet polite way. Offer gentle reminders at first. It could very well be that the customer forgot about the commitment. Unnecessary persistence may unwantedly sour relationships. Maintaining a good rapport with the customer increases the chance of prompt payment.
But often, agents will have to persist and follow-up daily to get the payment.

  • Communicate with clarity. Often ambiguity in communications delays payment. 
  • Opt for the customer’s preferred payment channel, if known. 
  • Maintain a log of each reminder in the CRM for easy follow-up.
  • When the customer has no means to make immediate payment, get a commitment for a specific date. Collect a post-dated check, if viable. 
  • Remind the customer before the deadline, and again when the deadline expires. The longer the delay, the less the chances of payment.
  • When following up with companies or firms, contact the right person or department responsible for account payables. In case of an unsatisfactory response, escalate to the superior officer or the company owner, as appropriate. 

5. Hand over the Debt to a Collection Agent or Take Legal Action

When follow-ups fail, or the customer stops replying to reminders, the best recourse is to hand over the debt to a collection agency. Collection agents use their experience and professional expertise to collect debts/ overdue. They are often successful where the creditor fails. The fee depends on the amount and the duration of the default. Many jurisdictions have regulations on employing collection agents. Check the local provisions and always remain on the right side of the law.
Reserve legal action as the last resort, considering the delays and the costs involved.

  • As a first step, send a notarized letter communicating the breach in contract. Stop providing the service, if the service is ongoing.
  • Opt for arbitration, if the terms of the contract allow. 
  • If the amount in dispute is $2000, depending on the jurisdiction, sue in the small claims court for fast results. 

The best way to get paid quickly is to have an efficient software that can verify details and generate invoices automatically, send the bills to your customers immediately after completing the service, issue reminders, capture payment details, issue receipts, and track your accounts receivable end-to-end. Advanced field service software like ReachOut allows you to create custom invoices quickly and affordably, increase your cash flow, and eliminate the need for chasing down late payments. 
Read more: How ReachOut helps sync your invoices with QuickBooks? 
Interested in automated online invoicing? Get in touch with us to learn more about the benefits of ReachOut’s invoicing feature. 

Digitize your field service operations from scheduling to invoicing with ReachOut. Connect your technicians with the companion mobile app to execute jobs and reduce paperwork in the field. Try ReachOut now and give your customers the fast and quality service they deserve.

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Sachin Krishna

Sachin works as a part of the digital marketing team at ReachOut Suite. He believes in a healthy and resourceful web and does his own little contributions for the purpose by creating and disseminating innovative and quality content.

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