Invoicing clients can be difficult. We look at 10 quick and easy ways to chase an overdue invoice and ensure they pay on time.
Let’s get something straight. Invoices should be paid on time. You’ve entered into an agreement that lays out how much you’re going to get paid in exchange for a certain number of hours of work or a certain outcome. It’s such a straightforward idea that we’ve built our entire society on it. Sadly, that’s seldom how it works in practice, and clients not paying invoices on time is painfully common.
I’ve been running Vermillion Films for over 10 years now and with over 550 projects for all manner of clients from tiny startups to giant corporations and the worst offenders… local government, we’ve seen it all.
The most important thing to understand is when invoicing clients the onus is on you to get yourself paid. The onus is not on the client to ensure you get paid on time. Yeah, that’s grossly unfair but you just need to ask yourself what a win looks like and here it’s not teaching a corporation a lesson about civic responsibility. A win is getting paid. So, let’s focus on that.
Also, remember you’re generally not dealing with bad people, usually, it’s just people who want to get out of their bureaucracy on time. So, the aim of this guide to invoicing clients is to pre-empt all the common reasons why invoices don’t get paid.
1. Be Nice
In the words of Patrick Swayze’s Dalton in Road House (1989)…. “Be Nice”.
Most people have some degree of discretion in their work. In this case, it might be to pay your invoice today (or not) or it might be to put your overdue invoice on the list of things to get signed off for payment today (or not). Either way, you want that discretion to fall on your side because you’ve been nice.
2. Clarify Upfront
To get paid on time you’ve got to know what ‘on time’ means. I’m afraid that putting 7-day terms on an invoice doesn’t mean clients are obliged to abide by them. So, lay it out for them upfront.
For example:
- “Our usual payment terms are XX days… is that ok?”
- “Let us know if there anything we need to do to become a supplier?”
- “Is there anything else we need to know?”
When invoicing larger clients, they will often dictate terms. You can try and argue but it’s unlikely you’ll win.
3. Speak To The Right Person
It might be that the person who commissioned your project is also responsible for getting you paid. But it’s just as likely that it’s someone you don’t know in the finance department. When invoicing clients, find out who the right person is, send them an introductory email, and then call to make sure they’ve received it. This way you’re not going into the spam folder and they understand that this ain’t your first rodeo either.
4. Chase Early
Don’t wait until you’ve got an overdue invoice to see when it’s going to be paid. When invoicing clients, get in touch 2 weeks before it’s due and ask the following questions:
- Have you received my invoice?
- Does it have all the information you need?
- When can I expect to be paid?
By doing this you’ve removed two of the most common causes of a client not paying an invoice – ‘we haven’t received it’ or ‘it’s not right’. Plus, you’ve done so early enough that you can rectify the issue, well done you. Furthermore, you’ve got them to give you a timeframe for payment.
You should never be concerned about enquiring about your invoices, particularly at an early stage. It’s your money, they’re just holding onto it for you.
5. Get Your Invoices Right
Hopefully, this is so obvious it shouldn’t need saying but ensure you have all of the relevant, correct information on the invoice. It’s worth noting that anti-fraud measures mean banks make it pretty hard to pay new suppliers. A great tip here is to make it clear on your invoice whether your account is a personal or a business one. Most banks ask companies for this information now when adding a new payee.
Also, note that when invoicing clients you don’t need to put threatening terms or make reference to Late Payment clauses on your invoice. The relevant legislation applies anyway and simply writing draconian terms on an invoice doesn’t make it law.
6. How To Communicate When Invoicing Clients
Email twice. Then phone. But remember rule 1 when doing so. And keep phoning until you have the answers you need.
7. Get Signed Off
Make sure you get a formal notification from your client that the project is complete and has been delivered. People often move very quickly onto the ‘next urgent thing’ so don’t be afraid to be quite insistent about this. This prevents clients from saying that your overdue invoice hasn’t been paid because the work isn’t finished.
8. How To Deal With The Bad Guys
After doing this kind of thing for a while you get a bit of a tingly spidey sense for when something’s not right. When payment commitments aren’t met, or communications aren’t responded to then you should toughen up a bit (whilst adhering to rule 1 still).
This is where the legislation comes in. None of what follows should be taken as formal legal advice, I’m a filmmaker, not a lawyer. But you should understand your rights. The Late Payment of Commercial Debts (Amendment) Regulations (2018) means that any commercial creditor (that’s you) is entitled to charge a fee for late payment as well as interest. The amounts are legally defined so you can’t just charge a million quid because you’re annoyed.
When invoicing clients, we usually find that a gentle reminder of our rights under this legislation is enough to shake our money loose. A carefully worded email explaining that deadlines have been missed and if payment isn’t made within 7 days you’re going to raise a late payment invoice, as per the Late Payment Regulations normally works. A quick google should help with the wording if you’re not sure.
We’ve rarely had to send that invoice and where we have sent it, the main payment has always followed shortly after. It’s up to you if you want to chase for the late payment invoice to be paid too.
9. Payment Plans
If it feels like a client can’t pay your overdue invoice then you could suggest a payment plan. Most people are afraid to admit they can’t pay. Deal with it head on and just ask outright if there’s an issue. You should resist the temptation to get angry, remember that victory here is financial, not moral. If the best you can hope for is honesty and a plan then aim for that. A grand a month for ten months is better than ten grand in ten months. Plus, if they go bust in 3 months, at least you got some of it.
10. Court
So if you’ve followed all of the above then you should have a realistic payment date. So, what do you do when that date whistles quietly by without the delightful clatter of cash landing in your bank account?
If nothing has worked up to now and you need to go to court then there’s plenty of advice online to make your case in the small claims court. It’s far from guaranteed that you’ll ever see the money so at this point it has kinda switched to being a moral victory rather than a financial one.
Wrapping Up
To sum up, clients not paying invoices can be fixed with good communication so get in touch with them and chase it up. Don’t email, always phone if you can. If it’s an error, it should get fixed quickly (though don’t be surprised if you have to wait till the next payment run).
This last point with invoicing clients isn’t really a tip but it’s worth mentioning that you should try to enjoy yourself. I know that sounds weird. But I used to hate chasing overdue invoices. Slowly I came to enjoy it. Now I have a colleague who does it for me and she hated it at the start too. It really is a dance. Learn the moves and you’ll see people trying to reach for excuses they can’t use because you’ve pre-empted them. It’s surprisingly satisfying.
