The art of being paid

Small business owners have a huge variety of skills. But most of the business owners we talk to say that "being paid" isn't one of them.


In this interactive guide, we explore how changing the way you communicate with customers can make sure you are paid faster. We've compiled advice from interviews with Accounts Receivable professionals and sales experts. But first, we need to know what kind of customer you're dealing with.

Why customers
delay paying


Incredibly, our 2017 report found that 35% of customers have no reason for paying invoices late1.

Meanwhile, 40% of SMBs cite "protecting client relationships" as the biggest barrier to chasing payments.

But in our experience, the solution to this problem stems from the same place as the SMBs' concerns - customer relationships.

1. The Domino Effect: the impact of late payments

Improving customer relationships


For some, chasing invoices is irritating admin that eats into family time. For others, it's an anxiety-inducing task where they struggle to balance their need for money with the need to avoid awkward conversations with their customers.

But being paid is an essential part of any successful working relationship. Like most relationships, those with your customers will benefit from a better understanding of their motivations and pressure points.

Know your customer

The more you know about your contact, the better chance you have of getting paid on time - or even early.

Answer a few questions and we'll share our invoicing and relationship-building advice for that customer.

Do they tend to ignore your emails when you chase for payments?

Are their colleagues unhelpful in locating them?

Do they call or email at inconvenient times? Do you regularly miss their calls?

Do they talk a lot about their procedures?

Do they seem apologetic about the delay when you get through?

Do they refuse to accept invoices with small errors?

Are they distracted when you talk? i.e talk-about wider stress of their business and not invoice

Procrastinator

Procrastinators know they're late paying, but there isn't always a reason for the delay. They ignore your emails. They don't respond to texts. They may even call you back at a time when they know you're busy and leave a voicemail to avoid talking directly.

View Procrastinator guide

Perfectionist

Perfectionists are process-driven people, who sometimes seem to be looking for reasons not to pay. Perhaps your invoice is missing the PO number. Perhaps it's in the wrong format. They're only small things, but they seem to make a big difference to this individual.

View Perfectionist guide

Plate Spinner

Plate spinners, as the name suggests, have a lot of things on the go at once. Sometimes, the environment they work in can seem a little chaotic, but they get things done. They normally pay you on time, but every so often they let it slip.

View Plate Spinner guide

Getting the procrastinator to pay on time

Whether you're dealing with a customer who's avoiding confrontation, or someone who simply doesn't see you as a priority, it's important that procrastinators are not allowed to forget about you. They need regular reminders of how you're supporting them, that you value the relationship, and that, ultimately, you need paying.

We've put together a plan outlining how you can contact them regularly, without feeling like you're hounding them.

Before you accept the job

Clearly communicate when you'd like to be paid and what the options are for making the payment. Ideally, put this in writing as well as discussing it face-to-face. Making this part of a wider conversation about the project helps minimise any awkwardness.

Also, if you're able to, give your customer payment options you can frame the conversation with as a question (how would you prefer to pay?) rather than a request (I like to be paid by…).

Procrastinators normally fall into the bracket of customers who have no reason for paying late. They simply haven't made it a priority. This means that incentives for early payments can be particularly effective. Consider including this in your payment terms.

During the job

The more responsive you are to your customer when your work or product is being delivered, the more likely they are to be responsive when it's time to pay.

When you're too busy to reply properly, send a quick text or email to say you'll get back to them later. It (quite literally) pays to keep them in the loop.

Just before you finish the job

Nudge, a book by Richard Thaler and Cass Sunstein, explores the idea that small and apparently insignificant things can have a big impact on people's decisions.

"By knowing how people think, we can make it easier for them to choose what is best for them, their families and society."

If we apply this theory to invoices being paid, it suggests that you should be in regular contact with your customers to 'nudge' them towards paying. This is truer than ever if your customer is a procrastinator.

So just before you complete your work or deliver your product, remind your customer of your payment terms.

A principle that's explored in Nudge, called herd behaviour, suggests that people are more likely to do something that they see others doing. For example, people are more likely to pick an apple pie in a cafe if they see others asking for it.

You can capitalise on this by letting your customers know that, on average, people pay you within the first week (or whatever is true for your business). This could be a small note that you include at the bottom of your invoice - or it could be something you mention by email.

1 Richard Thaler and Cass Sunstein, Nudge (Penguin, 2009)

When you send the invoice

When you let your customer know that it's time to pay, it's a good idea to reference the recently completed work - perhaps commenting on how you feel the project went and offering to tie up any loose ends.

This reminds them of the value of the relationship and makes the communication feel like it isn't all about you and being paid.

It's also worth letting your customers know if they can pay over the phone. This is often something you can tag on at the end of a call about something else: "While I have you on the line, would it be easier if I took the payment now?"

If you're going to see your customer, take a copy of the invoice with a 'thank you' gift. This is usually a low-value item with your branding on it. The idea is that it's regularly seen by the customer and keeps your company on their mind.

Here are a few ideas of gifts that you could have branded: USB stick, notepad, portable phone chargers, fridge magnets, jam or marmalade.

If you're not going to see your customer face-to-face, you can email them and post the gift. Avoid referencing the amount of money due in the subject line as it can put them off opening and even trigger their spam filter to send your email to the Trash folder.

One week after invoicing


We recommend contacting your customer once a week after you've sent the invoice, so you can continue to 'nudge' them towards making a payment.

This is especially important when you're dealing with a customer who you know to be a procrastinator.

However, now might feel a little soon to be demanding payment. Instead, try asking for feedback on the work or product you have just supplied them with. It's a great way of showing that you value their opinion and of keeping your business on their mind.

Two weeks after invoicing


If you haven't heard from them after two weeks, give them a call to double-check they received your invoice. If they're hard to get hold of, try asking if they're there, rather than whether you can speak to them.

By structuring your call this way, you get to find out if your contact is in the building and whether it's worth calling back later.

Three weeks after invoicing


If you're struggling to get through to the individual you need to speak to, here are a few tricks to have up your sleeve:

Search for them on LinkedIn and add them as a connection, sending a friendly message "to check that" they received your invoice.

If you're contacting a small business, ask to speak to Accounts Receivable rather than Accounts Payable. They are highly likely to be looked after by the same person, but it makes you sound like you're trying to pay them, rather than asking for payment.

Four weeks after invoicing


Unless your payment terms state otherwise, customers have thirty days to pay you.

If they still haven't paid after this time, you might want to consider some of these 'last resort' tactics. Any one of them could be the 'nudge' your customer needs to make that payment. It's also important to state clearly that they are in breach of your payment terms.

However, now might feel a little soon to be demanding payment. Instead, try asking for feedback on the work or product you have just supplied them with. It's a great way of showing that you value their opinion and of keeping your business on their mind.

Last resort tactics

Last resort tactic one

Add receipts to your emails so you can see if the recipient opened them. If you're using Outlook, simply go to File > Options > Mail. The option to add a delivery receipt is under Tracking.

Last resort tactic two

For smaller businesses, you may wish to be lenient. You could offer to split the invoice over two months to help with their cash flow. You could also remind them that they can pay in the way that suits them.

Last resort tactic three

For bigger businesses, try sending them an audit of all outstanding invoices.

Appeal to your customer's better nature. Explain that you're a small business and that having payments made on time is crucial.

Whilst this might feel like you're revealing too much, it is possible that someone who works for a larger organisation simply hasn't thought about the impact not paying will have on your cash flow.

After they've paid


If you can, it's worth delegating jobs so that the person chasing payments is not the same person who is taking a customer-facing role whilst delivering the work.

This helps you keep a positive relationship between the customer and the person they deal with on a regular basis. If you're a sole trader, it might even be worth asking a friend or family member if they'd help you chase invoices from your most problematic payers.

Download the procrastinator guide

Getting the perfectionist to pay on time

It can feel like this customer is trying to catch you out. However, more often than not, there are good reasons that they're asking you to work in a certain way.

The best solution is to really get under the skin of their processes - to understand what they need and to minimise invoice errors. We've put together a few suggestions about how you can do this.

But it's not all about your invoices. It's also important to build a little rapport. We've got some tips for that too.

Before you accept the job

Being clear on your terms is especially important when you're working with a perfectionist. Ask them about their processes before you start work.

Do they have any feedback on how you submitted your invoice last time? Or is there a particular time of the month when they normally pay their suppliers? That will help you know when to chase them and when to leave it.

During the job

If you're being paid by the same person who requested your services or product, check that they're happy with what you're delivering throughout the project.

This demonstrates that you value their opinion and are responsive to their needs. The more you can build up good will at this stage, the more reluctant they will be to push back on your invoice when the project is over.

Just before you finish the job

Nudge, a book by Richard Thaler and Cass Sunstein, explores the idea that small and apparently insignificant things can have a big impact on people's decisions.

"By knowing how people think, we can make it easier for them to choose what is best for them, their families and society."

If we apply this theory to invoices being paid, it suggests that you should be in regular contact with your customers to 'nudge' them towards paying.

So just before you complete your work or deliver your product, remind your customer of your payment terms.

If you're dealing with a perfectionist, you might also want to play their processes back to them. Send them an email, mentioning how you will submit the invoice and what it will include so that they have the chance to flag any misunderstandings sooner rather than later.

1 Richard Thaler and Cass Sunstein, Nudge (Penguin, 2009)

When you send the invoice

Some accounting software will automate parts of the invoicing process, minimising the need for manual data input and the room for error. Another way to reduce mistakes is to create a checklist of the things you know your customer wants.

Once you've had one invoice accepted by the perfectionist, you can save the successful document as a template and edit it for your next job. Alternatively, look for accounting software that will let you replicate and edit invoices.

When you let your customer know that it's time to pay, it's a good idea to reference the recently completed work - perhaps commenting on how you feel the project went and offering to tie up any loose ends.

This reminds them of the value of the relationship and makes the communication feel like it isn't all about you and being paid.

If you're going to see your customer, take a copy of the invoice with a 'thank you' gift. This is usually a low-value item with your branding on it. The idea is that it's regularly seen by the customer and keeps your company on their mind.

Here are a few ideas of gifts that you could have branded: USB, notepad, portable phone chargers, fridge magnets, jam or marmalade.

If you're not going to see your customer face-to-face, you can email them and post the gift.

Avoid referencing the amount of money due in the subject line as it can trigger their spam filter to send your email to the Trash folder.

But do include the invoice number in the subject line. This makes it easy to search for and is the kind of detail perfectionists appreciate.

One week after invoicing


We recommend contacting your customer once a week after you've sent the invoice, so you can continue to 'nudge' them towards making a payment.

If you're dealing with a perfectionist, it might be best to say that you're "checking that everything is ok with the invoice", rather than making it sound like you're chasing them.

Two weeks after invoicing


Perfectionists can come across as very formal, but mimicking this tone in your responses will only make the situation worse. Go for a friendly writing style that's professional and clear, without sounding stiff or frustrated.

You can also keep things friendly by visiting them when you get the chance and inviting them to any industry events you're attending. After all, they might become a business advocate in the future.

If you can't understand what's wrong with the invoice you submitted, it might be that they have cash flow issues themselves and are stalling for time. Try gently asking if they'd like a payment plan.

Three weeks after invoicing


If you're struggling to get through to the individual you need to speak to, here are a few tricks to have up your sleeve:

Search for them on LinkedIn, add them as a connection and send them a message.

If you're contacting a small business, ask to speak to Accounts Receivable rather than Accounts Payable. They are highly likely to be looked after by the same person, but it makes you sound like you're trying to pay them, rather than asking for payment.

Four weeks after invoicing


Unless your payment terms state otherwise, customers have thirty days to pay you.

If they still haven't paid after this time, and you have made all of the edits to your invoice that they requested, you might want to consider some of these 'last resort' tactics.

Any one of them could be the 'nudge' your customer needs to make that payment. It's also important to state clearly that they are in breach of your payment terms.

Last resort tactics

Last resort tactic one

Add receipts to your emails so you can see if the recipient opened them. If you're using Outlook, simply go to File > Options > Mail. The option to add a delivery receipt is under Tracking.

Last resort tactic two

For smaller businesses, you may wish to be lenient. You could offer to split the invoice over two months to help with their cash flow. You could also remind them that they can pay in the way that suits them.

Last resort tactic three

For bigger businesses, try sending them an audit of all outstanding invoices.

Appeal to your customer's better nature. Explain that you're a small business and that having payments made on time is crucial.

Whilst this might feel like you're revealing too much, it is possible that someone who works for a larger organisation simply hasn't thought about the impact not paying will have on your cash flow.

After they've paid


No matter how late the payment is, send a thank you note to let your customer know that the payment has been received and that you appreciate it. Perfectionists will particularly appreciate this kind of clear communication.

Download the perfectionist guide

Getting the plate spinner to pay on time

Building a relationship with this kind of customer is all about staying at the top of their to-do list. You need to show compassion for the challenges they face, whilst being persistent.

If the plate spinner is late paying you, it's usually because they're short of time. There are a few different ways you can make it easier for them to settle up.

There are also some innovative ways you can cut through the craziness that surrounds them to make sure your voice is heard. Take a look at our plan to see how.

Before you accept the job

Clearly communicate when you'd like to be paid and what the options are for making the payment. Ideally, put this in writing as well as discussing it face-to-face. Making this part of a wider conversation about the project helps minimise any awkwardness.

Also, if you're able to, give your customer payment options you can frame the conversation as a question (how would you prefer to pay?) rather than a request (I like to be paid by…).

During the job

During the job The more responsive you are to your customer when your work or product is being delivered, the more likely they are to be responsive when it's time to pay.

When you're too busy to reply properly, send a quick text or email to say you'll get back to them later. It (quite literally) pays to keep them in the loop.

Just before you finish the job

Nudge, a book by Richard Thaler and Cass Sunstein, explores the idea that small and apparently insignificant things can have a big impact on people's decisions.

"By knowing how people think, we can make it easier for them to choose what is best for them, their families and society."

If we apply this theory to invoices being paid, it suggests that you should be in regular contact with your customers to 'nudge' them towards paying. This is truer than ever if your customer is a plate spinner.

So just before you complete your work or deliver your product, remind your customer of your payment terms.

A principle that's explored in Nudge, called herd behaviour, suggests that people are more likely to do something that they see others doing. For example, people are more likely to pick an apple pie in a cafe if they see others asking for it.

You can capitalise on this by letting your customers know that, on average, people pay you within the first week (or whatever is true for your business). This could be a small note that you include at the bottom of your invoice - or it could be something you mention by email.

1 Richard Thaler and Cass Sunstein, Nudge (Penguin, 2009)

When you send the invoice

Because the plate spinner is time-poor, it's important to make paying your invoice quick and easy.

Ensure that you're giving them a range of ways to pay. Some accounting software will now give you the option to include a 'pay now' button in your invoices - allowing customers to pay online.

It's also worth letting your customers know if they can pay over the phone. This is often something you can tag on at the end of a call about something else: "While I have you on the line, would it be easier if I took the payment now?"

If you're going to see your customer, take a copy of the invoice with a 'thank you' gift. This is usually a low-value item with your branding on it. The idea is that it's regularly seen by the customer and keeps your company on their mind.

Here are a few ideas of gifts that you could have branded: a USB stick, notepad, portable phone chargers, fridge magnets, jam or marmalade.

If you're not going to see your customer face-to-face, you can email them and post the gift. Avoid referencing the amount of money due in the subject line as it can put them off opening and even trigger their spam filter to send your email to the Trash folder.

One week after invoicing


We recommend contacting your customer once a week after you've sent the invoice, so you can continue to 'nudge' them towards making a payment. This helps you stay at the top of their to-do list.

However, now might feel a little soon to be demanding payment. Instead, try asking for feedback on the work or product you have just supplied them with. It's a great way of showing that you value their opinion and of keeping your business on their mind.

Give your plate-spinning customers everything they need in one place by forwarding on your email with the invoice attached, rather than starting a new email every time.

Two weeks after invoicing


You don't want to come across as a pesterer, but it is important to keep talking to plate-spinning customers. Automated reminder emails can be a good way of reminding them to pay, without it looking like you, personally are chasing them.

Three weeks after invoicing


If you're struggling to get through to the individual you need to speak to, here are a few tricks to have up your sleeve:

Search for them on LinkedIn and add them as a connection, sending a friendly message "to check that" they received your invoice.

If you're contacting a small business, ask to speak to Accounts Receivable rather than Accounts Payable. They are highly likely to be looked after by the same person, but it makes you sound like you're trying to pay them, rather than asking for payment.

If you're struggling to get past a personal assistant, ask to be redirected to an alternative number, rather than asking if you can have the number.

Make it clear that you know the person you're trying to contact and you're not a cold caller, by saying things like "he'll know what it's about".

Four weeks after invoicing


Unless your payment terms state otherwise, customers have thirty days to pay you.

If they still haven't paid after this time, you might want to consider some of these 'last resort' tactics. Any one of them could be the 'nudge' your customer needs to make that payment. It's also important to state clearly that they are in breach of your payment terms.

Last resort tactics

Last resort tactic one

Add receipts to your emails so you can see if the recipient opened them. If you're using Outlook, simply go to File > Options > Mail. The option to add a delivery receipt is under Tracking.

Last resort tactic two

Send them an invite to a short meeting to talk about the late payment. This only has to be a 15-minute slot, but seeing it in their calendar will help remind them that you need to be paid.

Last resort tactic three

For smaller businesses, you may wish to be lenient. You could offer to split the invoice over two months to help with their cash flow. You could also remind them that they can pay in the way that suits them.

Last resort tactic four

For bigger businesses, try sending them an audit of all outstanding invoices.

Appeal to your customer's better nature. Explain that you're a small business and that having payments made on time is crucial.

Whilst this might feel like you're revealing too much, it is possible that someone who works for a larger organisation simply hasn't thought about the impact not paying will have on your cash flow.

After they've paid


If you'd like to work for this customer again, it's worth finding ways of staying in touch with them after they have paid.

Invite them to industry events when you get the chance. Keep them updated about how your business is doing and any major changes you make. You can even send them Christmas or holiday cards to ensure you're on their mind.

Download the plate spinner guide

No more chasing late payments

Available with Sage Business Cloud Accounting, the new invoice payments feature powered by Stripe makes it possible to take payments directly from your invoice. It means getting paid is so easy, you don't have to ask twice.




Faster

Now customers can pay, the moment they receive an invoice.



Clearer

Get a complete view of transactions, right from when the invoice is paid, to when the money enters your account.



Simpler

No need for you to deal with the messy bits of invoice payments when we do it all for you.

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