fbpx
How to ask customers to pay their outstanding balance during COVID-19 (+ email template to get paid now)

How to ask customers to pay their outstanding balance during COVID-19 (+ email template to get paid now)

COVID-19 has changed trade as we know it, perhaps forever. What hasn’t changed is your need to get paid on time. However, it’s the suppliers who engage in connected and empathetic communication with their customers now who will reap long-term rewards.

And it’s not just about recovering cash, says Amanda Lee. Amanda is an overdue accounts receivable specialist at The Retriever and has more than 15 years’ experience helping businesses turn late payers into highly profitable, return customers who pay on time.

“For businesses to recover from these extreme times, they will need their customer relationships intact and lines of communication open. The goal is always to collect the outstanding balance and retain a happy customer,” says Amanda.

“If you don’t retain your customers through COVID-19, you may not survive this pandemic, so it’s vital that you’re talking to them.”

Amanda Lee

Key points:

Here is Amanda’s advice on how to ask customers to pay their outstanding balances:

1. First check that you’ve delivered. If you’ve done great work, always expect to be paid!

2. Acknowledge that times have changed. Express your understanding and solidarity with your customers in a genuine manner. We are all in this together.

3. Focus on people. Put people and the relationship first and the money will follow.

4. Invite a conversation. Ask your customers to communicate with you and be available to take their call.

5. Be upfront about the outstanding balance. Remind your customer about the full amount owing. Be straightforward and polite—it’s okay to ask!

6. Remind customers of stimulus available: Eligible businesses will be able to access government cashflow boosts and other stimulus measures to pay their bills. Ask them if they have applied for these incentives.

7. Negotiate for a win:win. A payment plan can help retain a customer whose cashflow is constrained. Reducing credit terms can also reduce your credit risk if you continue supply.

8. Keep communicating. A series of reminders works. Make sure they continue to be helpful and map a way closer to payment. Always ensure your communications are encouraging a connected relationship.

Download Your Free AR Toolkit

Sign up to get access to our library of free eBooks, guides, templates and other resources.

Download the AR Toolkit

A 4-step plan (+ outstanding balance email template)

Step 1. First, deliver great work

If your customer has any disputes about their outstanding balance, your reminder communications will not be effective. The first step is to address any disputes immediately, hear the customer’s grievance and accept any responsibility so a resolution is immediate. Then agree on the amount to be paid.
Step 2. Send a reminder that is simple, polite, empathetic and invites a conversation. 

Personalise and customise Amanda’s email template to collect an outstanding balance:

Subject: Your Account and COVID-19 -How Do We Help?

{Date}

Hi {Name},

How are you? I hope my email finds you well.

We are trading in unusual and interesting times that are impacting us all in similar ways. We want to communicate with you regularly to stay abreast of any issues you may be facing.

I want to discuss your account that has an overdue balance totalling {$0,000.00}. If you’re experiencing financial difficulties or waiting for government assistance, such as JobKeeper, which may delay your payment of the account, please call me on {0000 000 000} so we can discuss an amicable and workable solution to get through the next few weeks. This will assist us in managing our cash flow as well.

It’s vital that we work together through this extreme event and continue to support each other; communication is key. It is important to us that our customers are okay, and we’re committed to doing what we can to support you whilst maintaining our own operations.

I appreciate you giving this your attention and I look forward to your payment or communication.

Take care and enjoy your week.

Attachment: {Account Statement}

Regards,

{Name}

{Logo}

{Landline | Mobile | Email}

Friendly reminder email template about outstanding balance

So what does this template get right?

It’s personal—note that it is addressed to a person and not signed off from a generic name like ‘accounts’. The tone is open and friendly. There are lots of ‘I’ and ‘we’ statements that remind the customer of your shared relationship.

It’s timely—the email references current times and sets the scene for communication over the coming weeks.

It’s offering support—support to work together, support for each other’s cashflow, and it expresses genuine concern and interest in how the customer is faring.

It’s actionable—the customer has enough information to understand your point of view and also has a clear and open invitation to return the communication.

Step 3. Follow-up

You’ve invited a conversation, now allow your customer time to respond. Your customers may be working differently and their response times may be longer. Alternatively, your customers may now have more time for an in-depth conversation.

Either way, be prepared to follow-up. Test out different communication channels. You may find that a text message gets answered more quickly. This letter (above) gives you a point of reference to refer back to in your future communication.

Remain persistent and consistent in your follow-ups. Now is the time to stay on your customer’s radar and keep collecting. As stimulus payments flow through the supply chain from May to September, use this time to position your business as a preferred supplier at the head of the payments queue.

Step 4. Make permanent changes to your accounts receivable process

At ezyCollect, we have seen a rise in financial controllers and credit managers eager to use this time to make permanent improvements to their accounts receivable process and efficiency. The COVID-19 pandemic has opened everyone’s eyes to new and improved ways of working and relating to their customers.

What’s more, business operators are more aware than ever before of the critical role that accounts receivable plays in the cash flow cycle. Businesses that have cash locked away in unpaid invoices are now acutely aware of the deficit in their working capital. You cannot maintain a status quo of carrying significant overdue accounts if you want to remain in business in the near future.

In summary

Keep up, in fact, ramp up, your collection efforts during COVID-19, especially while government- assisted cash is flowing through the supply chain. Excellent communication is always key to getting paid on time and maintaining respectful customer relationships. Tailor your communications to empathise with current times. Open the lines of communication. Negotiate payment plans that support cash flow and the trade relationships you want to maintain. Customer retention is vital.

It’s crucial to make permanent improvements to your collections efficiency so you maintain a healthy cashflow buffer to fund the tough times and your plans for growth. COVID-19 has taught us all that anything can happen and we have to prepare ourselves for a new future.

To learn more about our accounts receivable solutions and how you can optimise your collections, watch a free demo below.

How to collect unpaid invoices during COVID-19: Debt collection webinar

How to collect unpaid invoices during COVID-19: Debt collection webinar

COVID-19 has spun business on its head. While some businesses are powering on, others are scrambling to survive.

Importantly, a customer’s obligation to pay for goods and services that you have provided has not changed. Your process to collect debts should adapt if it needs to, but it should continue. Overdue invoices are an unnecessary cash flow burden that few businesses can afford to carry right now.

Andrew Smith, CEO, ARMA

In a recent webinar [15 April 2020], the debt collection specialists from ARMA shared their expertise on how creditors can work with their customers to get paid during COVID-19. (You can watch the full webinar at the bottom of this page).

ARMA’s CEO, Andrew Smith, and Head of Sales, Eddie Smith, have hundreds of conversations each day with creditors and their debtors, and offer this advice:

Key points:

  • Be honest, open and compassionate with customers

  • Mix up your communication channels

  • Communicate frequently

  • Use pre-legal options such as demand letters

  • Seek extra protection on your credit

  • Future-proof your collections process

Trial ezyCollect for 2 months free during COVID-19

Be honest, open and compassionate with customers

Suppliers want to maintain strong relationships with their customers. But relationships can deteriorate when debtors prolong payment times without agreement. As a creditor, be honest with your customers about your payment expectations—it permits your customers to be open and honest with you in return.

For example, start a debt collection conversation the same way that you hope someone would speak with you. Ask your customer how they have been impacted by the current pandemic situation. Listen, and share your understanding. Then let your customer know that you need to understand how they intend to start paying your overdue invoices.

Additionally, be prepared to accept payments in instalments and to negotiate ongoing credit terms. This way, you map a way forward for your customer to repay outstanding invoices. You also put more protection around future credit that you may extend to them.

Mix up your communication channels

It’s not business as usual for most of us. Your customer may close their office and work different hours from home. Try contacting your customers via text message, email, and phone. Pay attention to how your customers are responding, then adapt to their preferred channel, even if it’s not your preference.

For example, while Andrew likes to call debtors and speak with them over the phone, he sees a high response rate from text messages as people reply after hours. Give people a little extra time to respond, as your customers may also be looking after their children at home during the day.

Communicate frequently

The business payment landscape is changing rapidly, even daily. As stimulus packages start to roll out, businesses that were hanging on to their cash last week will soon have cash on hand to pay their bills. 

Therefore, don’t be shy about staying in touch with your customers and politely pursuing the payment conversation. As Andrew points out, the purpose of the stimulus packages is to keep businesses trading and that includes paying their bills. 

In fact, your communication can be really helpful to customers right now, especially if you can share how they can access stimulus packages available to them. 

You can download a one page summary of Australian stimulus packages here: Stimulus and Assistance Guide for Individuals and Businesses.

Remember, communicate consistently and politely, don’t harass or intimidate. For more information on debt collection guidelines from the Australian Competition and Consumer Commission (ACCC), read our post here.

Yes, you can still send a demand letter

While the Australian Government has temporarily changed debt collection laws as a coronavirus response, pre-legal avenues are unchanged. In fact, they are more important than ever, says Eddie.

Regardless of COVID-19, paying a bill when it falls due it still a requirement of your credit terms and the law. (Some companies are freezing billing on mortgages, energy etc.)

As debt recovery experts, Andrew and Eddie know for a fact that invoices become harder to collect as they age. Their advice is to bring forward your threshold for sending a demand letter; if you used to wait for 90 days overdue, bring it forward to 60 days or sooner. 

At ARMA, they have changed the wording of their standard demand letter to assure debtors that there are extra options for them to settle their account.

Try wording such as:

We understand that your business may have been affected by COVID-19, and we can provide you with additional options to assist your payments throughout this period. 

We request that you contact our customer service team on <<Phone Number>> to provide further information to enable us to assist you. 

Failure to contact us will result in this account proceeding to our debt collection agency.’

Seek extra protection before extending new credit

If you don’t already have these measures in place (don’t panic, many businesses don’t), consider adding these conditions to your new contracts so you have more options to recover any debt if a customer’s business fails:

  • Personal Guarantees, Director Guarantees: If your customer fails, your business can pursue the personal guarantor or business directors to recover any losses.

  • PPSR: A national register where you make a claim to retain an interest on goods that you have supplied but not yet been paid for.

  • Caveats: Claiming an interest in a debtor’s personal property as security over credit you have extended.

  • Lodge a credit default: List a default on a customer’s credit report with a commercial credit bureau.

  • Costs Clause: Include a clause in your contracts stating that your debtor is responsible for specified costs you incur to recover the debt.

In Eddie’s experience, creditors hesitate to ask their customers for these assurances, but his advice is simple: Have the conversation upfront.

It’s not too late to go back to existing customers and negotiate new terms. Help your customers to understand that you want to keep trading them but need further security if their payment behaviour has been deteriorating. You’ll be surprised to know how many customers will accept greater controls so they can keep trading with you and avoid going on credit hold or being referred to the courts.

Seek legal advice on any contractual changes.

Future-proof your collections process

Learn from what’s happening now and put more safeguards around your debt collection for future uncertainties.

  • Enhance your capacity to communicate digitally with your customers.

  • Update your customers’ contact details, including business identifiers such as ABNs and business addresses, so that if you need to pursue customers, you know how to find them.

  • Improve your overdue invoice tracking system so that you have high visibility of your ageing invoices.

  • Automate the collections process as much as you can so you create time for meaningful conversations and customer relationship management.

  • Rigorously monitor the financial health of your customers with services like credit risk monitoring. Don’t just rely on your customer’s word.

  • Review your contracts and terms and conditions to get better security over your goods and services.

  • Be prepared to stop supply if customers exceed their limits or terms.


Watch the full 1-hour webinar below. (Note that offers included in this webinar expire 30 April 2020).

ezyCollect and ARMA webinar 15 April 2020: What are your options if your customers stop paying you?

Get started on ezyCollect’s credit management and accounts receivable platform for free:

Overdue invoices? Templates for email and SMS reminders

Overdue invoices? Templates for email and SMS reminders

Research from ezyCollect shows that most overdue invoices are paid by the third reminder. That means the supplier must typically request payment two or three times before an invoice is paid. In the digital age, those reminders are usually sent by email and SMS.

With the right format, tone and timing your reminders for overdue invoices can be very powerful. Done well, your reminders become a great support tool for your customers’ payables team. Suppliers who use ezyCollect report back that their customers actually thank them for sending helpful payment reminders!

Remember, your reminder is a communication from your business and is great opportunity to represent your professionalism and enhance your customer relationship.

Our tips below will help your customers with overdue invoices to understand their debt and respond promptly to your requests for payment.

Download Your Free AR Toolkit

Sign up to get access to our library of free eBooks, guides, templates and other resources.


Download the AR Toolkit

The right way to write overdue invoice email reminders

Email continues to be both a universal and popular mode of communication to reach overdue customers. But simply sending an email doesn’t mean your customer will open it. While emails are relatively cheap—and automation makes the cost per email even cheaper—an ineffective email (or series of emails) is a waste of time and money.

Make it easier for your customer to respond to your emails:

  • Mobile optimise
    Today, more than half of all emails are read on mobile devices. 72 percent of people delete emails that don’t look good on mobiles; 22 per cent unsubscribe (2016 Adestra Consumer Adoption and Usage Study).
  • Personalise
    Your ‘from’ address and sign-off should include names your customer will recognise. Your salutation to your customer should also be personalised e.g. ‘Dear Sam, …’
  • Target
    Research the right person in your customer’s business to receive your reminder emails. Copy in their manager and your manager as  debtors reach your danger zone for default (in ezyCollect we call these Red Zone customers i.e. any business more than 60 days overdue).
  • Subject lines
    Brief is best. Use action words such ‘Please review’ or ‘Please action’. Tell your customer exactly what your email is about so they are compelled to open it. (Try testing different subject lines to see which ones get the best response rates.)
  • Oldest overdue invoice
    Rather than communicate individually about every invoice, communicate about the entire account. This means that you will consolidate all overdue invoices into each reminder and the oldest overdue invoice will be the priority (See our template below.)
  • Content
    Keep this concise. Use bullet points and short paragraphs. Marketing specialists, Hubspot, report “nothing boosts opens and clicks as well as an old school, plain-text email.”  i.e. choose plain text over HTML for your reminders.
  • Be polite
    Often your customer has simply overlooked your invoice. Don’t jeopardise your relationship unnecessarily by starting with harsh language. Reply to completed payments with a thank you email.
  • Include attachments
    Add the overdue invoice to your reminder email, or if there are many, consolidate them into one table in the body of the email and then add invoice copies as attachments.
  • Schedule a series of emails
    One reminder email may not be enough to generate a payment. Still, you don’t want to bombard your customer’s inbox daily. Plan a schedule of emails that will reach your customer over time. When intermixed with other modes of communication e.g. SMS reminders, more than one reminder is very effective. Subsequent emails should reference your agreed terms and conditions e.g. ‘As agreed in our terms and conditions, we will be placing your account on credit hold…’
  • Proofread
    Check spelling and grammar, tone, URL links, and make sure any default template copy is removed.
  • Reach every overdue customer
    If you’re issuing large numbers of invoices it’s almost impossible to reach every customer without significant labour investment, or automation. Still, customers can easily slip under the radar if you don’t follow-up on the invoices that become overdue.
  • Send on the right day
    If you know your customer’s payment schedule e.g. end of month, send your reminder email in time. Don’t send on a Friday if their office hours are Monday to Thursday.
  • Include clear calls to action
    Please pay immediately’ is pretty clear. Provide a name and number should your customer needs to contact someone in your business to discuss their overdue invoices.
  • Make it easy to action
    Add a Pay Now button—when this leads to your online payments portal, your customer is one click away from paying off their overdue invoices.

Template for overdue invoice reminder email

Subject: Reminder: Your account from <your company name> is overdue

Dear <Customer name>,

I hope you are well. A friendly reminder that our trading terms are <payment terms in days>.

Your oldest overdue invoice is now <number of days> days overdue.

The total amount overdue is <total amount overdue>. The table below summaries all overdues.

<table of overdue invoices>

I have attached invoice copies for your reference.

We would appreciate immediate payment.

We welcome your payment by the following methods:

<include all payment methods>

To pay via credit card, please click the Pay Now button below:

<Pay Now button>

Please contact us immediately for any queries about your account.

Kind regards,

<Contact name, email, phone number>

(Note: If using ezyCollect’s automated payment reminders, you can set up your email templates with drag and drop merge fields like ‘total amount overdue’, an ‘overdue invoice table’, and a ‘Pay Now’ button for online payments. The system collates all relevant information for you.)

Template for overdue invoice SMS reminder

Your SMS reminder will be much shorter than your email reminder. You have much less ‘real estate’ to work with!

  • Use SMS for bulletin or alert style messages.
  • Be brief and to the point.
  • No salutation required.
  • Keep characters to around 200.
  • Preview your message to ensure the reader doesn’t need to scroll too far.

 

Key points:

  • Credit managers rely on overdue invoice reminders to reign in late payments.
  • Your customers rely on your helpful reminders about overdue invoices.
  • Get the tone, content and format of your reminders right so you can generate a prompt payment or invite a payment discussion.
  • A best practice overdue reminder email or SMS template is a crucial tool in your business.

Improve your collections and communications workflow with accounts receivable automation from ezyCollect. Watch a free demo to see how it can help you.