We talk a lot about being proactive when it comes to invoicing, but now let's talk about a specific practice that can make an enormous difference in getting paid faster, lowering Average Days to Pay (ADP) by 10 days for a typical business.
Let’s say an invoice is 30 days past due. If your standard terms are Net 30, that means it’s likely been 60 days since you actually did the work and sent the invoice.
When you finally get the customer on the phone (which might take another week or two) you find out there was a problem with the bill! Which can be really FRUSTRATING!
Maybe a P.O. number was missing...the needed a W-9….a project name was misspelled…or the bill went to the wrong person—whatever. It might be a big issue, or something trivial—but either way, you’re back to square one with getting the bill paid.
Now, best-case scenario, you are getting paid 60-90 days after completing your work— which is double or triple what you’d expected.
So, what can be done? The solution is easier than you would think. I would like to introduce the Confirmatory Phone Call.
The idea is really simple: Call your customers about the invoice, before the invoice is due.
You wouldn’t deliver a project without making sure everything was acceptable and understood by the customer. Similarly, you shouldn’t deliver the invoice without making sure it’s acceptable and understood too.
Its a customer service play. Its a no brainer. And it works.
Now, here’s how to approach these calls and why they can make such a difference when it comes to getting paid. Your goal is to ensure everything is acceptable with the bill, to make sure your client understands the items listed, and to answer any questions.
By making this phone call you are accomplishing a number of things: you are getting out in front of any potential problems that could keep them from paying on time, you are putting the invoice at the front of their mind, and you’re letting them know it’s at the front of yours as well. Most importantly, you’re verifying that they did, in fact, receive the invoice (which by the way, is the most common reason cited for late invoice payments).
A good rule of thumb is to make a confirmatory phone call seven days after an invoice has been sent. This will give the customer enough time to take a look at the invoice, but also leaves you enough time to resolve any problems that may be brought up on the call.
Confirmatory Call Roadmap
It might initially sound awkward to call your customer before the invoice is due, but remember, you’re not trying to collect, this isn’t a reminder, and it’s definitely not harassment—it's a customer service call. And if there is a problem of some sort and you discover it early, you’ll be the hero, the customer will be impressed, and your cash flow will resume flowing.
Here are questions you can ask:
1. Have you had a chance to review the invoice?
2. Have we delivered everything you expected?
3. Is the amount of the bill what you expected?
4. Is anything missing?
If you approach these calls with a helpful, customer-service-oriented attitude, chances are the they’ll be very productive. And, you’ll be increasing your chances of getting paid when the bill is actually due.
The confirmatory phone call is one of the most effective and powerful tools at your disposal. Use it well.
Now, go get your money.