How to Spend Less Time Chasing Customers for Payment — And More Time Selling

For anyone in sales, the thrill of landing a new customer is hard to beat. Significantly less thrilling, though, is chasing down customers for payment on their orders. But as anyone knows, making sales is only the beginning, because when customers don’t pay, everyone suffers.

According to Hubspot, on average, salespeople spend less than half of their day actually selling to customers. The rest of their time is spent prospecting and taking care of administration tasks, including chasing customers for payments. This begs the question, then, of whether that is the best use of a talented salesperson’s time, and if there are ways to reduce the amount of time spent on collections to increase time making sales? The simple answer is yes — and there are some easy ways to do this.

Setting Expectations, the Key to Payment

Perhaps the most important part of getting on-time payments is setting expectations from the very start. Making your terms clear in the initial contract, requiring customers to agree to those terms, and outlining how you will enforce those terms can go a long way to ensuring that you don’t have to spend time chasing down customers. Keeping your terms short — 30 days or less — can also help reduce slow or late payments, as customers are less likely to put off payments that are due right away.

It’s also important that you don’t allow customer debts to continue to grow if they don’t pay. Refusing to provide products or services when bills go unpaid protects you from loss. If customers have a history of late payments or non-payment, requiring payment upfront can completely eliminate the need to chase them down. Charging late fees or penalties for missed or slow payments — or offering discounts for payments made in full and on time — can also serve as powerful incentives for prompt payment.

Make It Easy to Pay

Another key to helping your customers pay on time is making it as easy as possible to pay. Customers don’t want to jump through hoops to pay a bill, and in fact, most expect to have the option of paying electronically. Research indicates that vendors who use EBPP (electronic bill presentation and payment) systems get paid faster than those who send invoices by mail. Many customers will pay a bill received electronically on the same day, but even small businesses tend to pay an average of eight days sooner when they can pay online. Even if you still send traditional paper bills, offering online payment options can decrease the time to pay.

Restructure Your Invoices

Have you ever taken a close look at your invoices? It may be possible that the language that you’re using and the way you’re structuring your bills — whether mailed or electronic — are slowing down customer payments.

For example, if you use terms like “Net 30,” your customers may be unclear about what that means and wait a full 30 days to pay. Instead, note that the bill is due within 30 days (or however many days per your policy) of receipt. Using jargon or complex terms is only going to slow down payments, so make it as clear as possible.

Itemizing your invoices can also help eliminate payment delays. Showing exactly what was purchased, when, and if applicable, individual prices, provides clarity — and reduces the likelihood of a customer failing to pay over disputes related to the amount of the invoice. Not to mention, itemizing your invoices also helps your customers see the value in what they have purchased, which supports your future sales efforts.

Finally, a little courtesy can go a long way to speeding up payments. Research shows that invoices that say “please” and “thank you” and acknowledge a customer’s value as a customer are generally paid faster than those that don’t. Use your invoice as an opportunity to thank a customer for their business, and help support the relationship that you have built. Most people don’t want to harm good working relationships over money, so anything you can do to keep those relationships healthy is a good idea.

Sometimes, payments are made due to extenuating circumstances, and it’s a salesperson’s job to reach out to a customer to figure out the problem and reach a solution. However, by setting up your invoicing and payment systems to encourage on-time payments, you’ll have to spend significantly less time chasing down customers, and have more time to develop to other revenue-producing activities.