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.

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:

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.

 FAQs

How do you write a reminder letter for outstanding payments?

When writing a reminder letter, keep in mind that it has to be simple, polite, emphathetic and invites a conversation. Here are other practical points to consider when reminding your customers of their outstanding payments:

1. It has to be personal – Address your letter to a person’s name rather than a generic name or team name. Doing so lends a humanness to your tone and reminds your customers of your relationship.
2. Your letter should be timely – Send the reminder as a time that’s in line with your customer’s previous payment schedules.Reference current times and what your customers can expect in terms of communication over the next coming days and weeks.
3. Offer support – Express your concern of how your customer is doing and offer your support to work together to help them make their payments.
4. Provide information that’s actionable – Write your letter in a way that invites action on the customer’s end to respond to your reminder. Provide enough information that will make it easier for them to take the next steps – either in paying you or reaching out to you.

How do you politely ask for overdue payment?

First and foremost, always ensure you’ve delivered great work. If there are any issues on the invoice, make sure you resolve them promptly. Resolving any disputes and taking responsibility will ensure that your follow-up and reminders will be received positively by your customers. When following-up, make sure to put your client realtionship first. More than getting paid, your reminders should be focused on understanding where your customers are coming from and offering them support in case they need help with paying on time. With that being said, keep in mind to be straightforward about their outstanding balance. Be polite without skipping the important parts of your reminder. Miscommunication should not have a place in your business relationships.

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 cashflow and the trade relationships you want to maintain. Customer retention is vital.

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, let’s chat and we’ll go through options for your business.