How to Collect Outstanding Invoices Faster With Better Collections Templates

How to Collect Outstanding Invoices Faster With Better Collections Templates

How to Collect Outstanding Invoices Faster With Better Collections Templates

Effective communication is the most critical aspect of any business A/R collections strategy. It begins before delinquency and even before sending a single invoice.

That is why standardizing communications is important, and templates provide the tool for companies to do so. 

But how do you create outstanding invoices and follow-up notices that convert unpaid Invoices into cash? 

Success requires a comprehensive and proactive approach to preventing overdue invoices.

Tips for collecting outstanding and unpaid invoices faster

While outstanding and unpaid invoices can’t be entirely avoided, here are some tips to track down any outstanding payment.

1. Set clear terms

The easiest and most proactive way to avoid unpaid or long-term outstanding invoices is to be clear with your terms from the start. Make sure that the due date field is clearly specified at the top of every invoice. If you find that you have customers who are frequently late with their invoice payments, you may want to consider adding notes to the invoice regarding the due date and payment terms.

2. Send reminders

Outstanding or overdue invoices don’t always mean that the customer is avoiding paying. With the influx of emails that many of us get, your business’s outstanding invoice email may have gotten accidentally overlooked. With Bridger, you can schedule professional reminder messages to send a customer regarding the outstanding invoice.

3. Institute a late fee

If you begin to see too many outstanding invoices become overdue, it may be beneficial to implement a late fee with new customers regarding any unpaid invoices that are past their due date. Be sure to include the terms of these penalties in any contracts or agreements with your customers ahead of time.

4. Send an overdue invoice (with a different layout)

While you may have sent your standard branded invoice template with the payment reminders, try changing the look of the invoice once it becomes overdue. This could mean adding a bright, eye-catching color, like red, to the top as a header or a notice. You could also highlight the due date, agreed-upon terms, full amount owed, and any penalties added. An overdue invoice email might just be the urgency your customer needs to see in their inbox to push them to pay.

5. Go analog

We might rely on the digital world nowadays, but nothing can replace a phone call or an SMS/Whatsapp message. A full email inbox can often be ignored, but an SMS or a phone call directly from you can rarely go unnoticed. (Bridger provides an account receivables expert attached to your business, who makes calls on your behalf)

6. Offer flexible payment options

Offering multiple payment options for your customers from the start can be a great way to avoid unpaid invoices. Payment options such as a debit card, instant payments, and buy now, pay later plans can give your customers the flexibility they need while still ensuring your business is getting paid. If payment upfront or in full is not an option, you can negotiate having your customers set up installments over time while avoiding a total delay of payment.

Why Should You Use Templates for SMS Reminders and Emails for Invoice Collections?

Your accounts receivable team has likely employed several other solutions for settling the worst outstanding balance invoice. How can a template make things easier or improve their efforts? Consider the following points:

  • Using standardized templates reduces the completion time for your team.
  • Standardized templates are necessary for automation, which further reduces time and errors.
  • Standardized templates lead to documentation, which makes it easier for staff to handle work disruptions, such as unexpected resignations.
  • Standardized templates make it easier for accounts receivable teams to respond effectively and calmly, even during high-stress situations.

Back to the Effective reminder template...

What Are the Top Features of an Effective Template?

How effective something is depends on how well it succeeds at what it is designed to do. You can have two main types of templates: one for the whole workflow and another for specific emails. Because templates suit various purposes, the measure of effectiveness also varies. Even so, there are some basics you can apply across most templates you may use for collections.

Start With the End in Mind

Be specific about what you hope to achieve and get it down to numbers. Quantifying success makes it easier to measure progress as time goes by. For example, you might need templates to improve your day's sales outstanding by 30%. Keep this end goal in mind when creating your templates.

Ensure Cohesiveness With Existing Strategies

Your templates should fit with the existing strategies you’re using for collections and accounts receivable. Remember that some template elements may need to reflect changes in regulatory laws or customer expectations. Keep your templates up-to-date with any new procedures and policies.

Keep It Simple

Templates that are complex and hard to understand will only confuse customers and employees alike. Confusion can make it harder for customers to take action. Use straightforward language and avoid jargon. Remember that the goal is to get customers to quickly understand and pay outstanding billing.

Clearly State the Payment Options

Clear communication helps customers identify which option works best for them. Include details such as accepted payment methods, terms, due dates, and contact information. Tech-savvy companies take it one step further by sending electronic invoices where customers can initiate payment with a click.

Be Respectful

Keep your tone polite and respectful when you request outstanding payment. Outline all the actions a customer needs to take to pay their overdue balance. This can prevent misunderstandings and avoid unnecessary disputes that could lead to further delays. If delinquency persists, balance urgency with respect. Some customers genuinely wish to pay but will not attempt to reach out if they feel you will be combative.

Make It Personal

While templates help send out bulk messages, customers may feel a more powerful call to action when you personalize the message. Include the customer’s name, account number, and any other relevant information to make it clear the message is meant for them. Providing personalized information also helps customers correctly identify invoices and related details.

Always Include a CTA

Even your invoices should include a call to action. The goal is always to prompt customers to pay or follow up with questions. You can hyperlink additional information in electronic communication, such as a link to an online payment portal.

How Can You Use Templates To Collect Invoices Outstanding for Payment?

Templates form the basis of an excellent collections strategy, but they are just a means to an end. How you implement and use them will ultimately determine whether you secure the desired results. Here are some best practices to get you started.

Create a Template for Every Step

Don’t just use templates for sending invoices and requesting payment. Create an invoice for every step of the collection process. That starts with collecting information you use to determine the health of your customers before extending credit. Here are some examples:

  • Notices explaining the payment process to new customers
  • Reminder emails
  • Invoices to record deliverables and the associated costs
  • Emails or letters requesting payment
  • Follow-up emails or letters notifying customers of delinquency
  • Emails or letters telling customers of adverse action due to continued delinquency

Automate Editing and Sending Communications

Use automation software to automate the addition of necessary details. These applications integrate with other software and allow you to add essential information so that you can create a set-it-and-forget-it system that handles invoicing on your behalf. It can also automate follow-up communications.

Create a Contingency Plan for Ongoing Delinquencies

Monitor accounts closely to determine the risk of overdue payments, the level of delinquency, and how it will affect your business. Then, create contingency plans, such as using Invoice financing to fill cash flow gaps.

Use Invoice/Payment Tracking Software

Payment tracking software helps you monitor customer Invoices/payments and their status in real-time. This can help you spot potential problems early and take corrective action before they become critical. You can also monitor specific KPIs and generate reports.

Include a Payment Calendar

Schedule your invoice submissions and follow-up reminders at an effective tempo. Don’t wait until an invoice is 30 days overdue to ask why and prompt payment. Include payment due dates in your invoices and any communication you send out.

Focus on Your Most High-Risk Customers

Your time and resources are limited, so focus on customers with the most significant risk of default. Overdue invoices are a great starting point, but proactive action should have you identifying high-risk customers before it gets to non-payment. Create templates specifically for them.

Here’s how Bridger A/R Automation Software and Invoice financing can help.

Use our automation software to streamline your entire Invoice-to-cash strategy. We make it easier to create/send invoices and send out follow-up communications at the pace that works for you.

Bridger A/R automation and Invoice financing tools have helped our clients reduce DSO and convert invoices into cash. 

Book your live demo to see what Bridger can do for your business.

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