Gentle reminder
Your invoice could have been forgotten, misplaced or buried in a pile on your client’s desk. If they have gone past your due date, email – or call depending on what is most comfortable for you – a gentle reminder asking them the status of payment.
If you use QuickBooks or QuickBooks Online, you can also email a statement directly from the system.
Be personal
If you’ve reminded the client and no payment has come, it is time for either another email or a phone call. Your client may tell you that he is very busy and apologizes that he “forgot” again.
Explain that cash flow is very important to your small business and that you can not afford to carry the unpaid invoice any longer.
Always remember to make it easy for your client to pay you. Tell him that you are happy to be paid via wire, PayPal, credit card – offer him all the options and be sure that you have more than just “send a check” available. Make it as easy as possible!
Be the “squeaky wheel”
If your client is having his own cash flow issues, he may need to make hard choices about who gets paid when. Send an email reminder or statement every other day or every week – take your comfort level and go one step further.
By being the “squeaky wheel”, you insure that you are at the forefront of his mind when he is paying bills.
Cut him off
As hard as it is, sometimes you need to tell the client – even though you’ve become friends – that you can not do any additional work until your invoices are paid in full.
As a small business owner, you are responsible for the running of your business and, as a result, there are times when you need to make tough decisions that are best for your business. You can’t afford to work without compensation and your client should understand that.
Get tough
You’ve tried being gentle. You’ve tried being personal. And you’ve squeaked so many times that you’re tired of hearing your own voice. Now it’s time to put that prepaid legal plan to use!
Have your attorney send a formal letter stating that if you are not paid, in full, within X number of days, that you will either take the client to small claims court (the normal limit is between $2,000 and $7,500 – it varies by state in the U.S.) or to arbitration. Whether you sue or go to arbitration depends on the contract you have with your client as some state that disputes will be arbitrated.