Draycir Blog

Late payments: Six ways to write effective chase letters

Late payments: Six ways to write effective chase letters

When you have unpaid invoices, it's in your interests to contact the customer to find out why and get paid as soon as possible, so your cash flow doesn’t suffer. According to Bacs, the average company is waiting for £31,901 in late payments. Why should you be the one left waiting - until you get paid it’s your money in someone else’s account. 

You may decide to contact your customer by letter or email to chase the late payment, which is less time-consuming than contacting every customer by telephone. But when writing chasing letters, whilst you need to be taken seriously, you need to correspond in a polite manner to maintain a positive customer relationship.

Here are six ways to ensure your chase letters help you to get paid faster.

1. Chase via email. Chasing your customer via email is not only cheaper than sending a chasing payment letter in the post, it’s faster too, which will help you get your payment sooner. Providing you have the right contact email address it also means to go directly to the person it needs to go to.

2. Scale your level of firmness. The further down the chase cycle you go, your late payment reminders need to become firmer in tone.
1st letter – short & friendly
2nd letter – more direct & less cordial than the first
3rd letter – demand payment by a certain date or legal action will be threatened
Final letter – demand payment and inform that legal proceedings will be started.

3. Be specific. State the exact date you expect overdue payments to be made. That way if you find yourself in a court of law, there will be less ambiguity over the client’s failure to pay you on time.

4. Be factual. Remind them of the last time you contacted them to chase payment, how many debtor days have passed and of course, how much they owe.

5. Provide proof of evidence. You could even attach a copy of the overdue invoice and/ or statements to your email. There’s no excuse then for missing invoices.

6. Give the benefit of the doubt. Ask if there a reason for the overdue payment. Check that there are no unresolved disputes such as damaged goods that may have delayed payment.

7. Make it easy to pay. Take any hassle out of the process of making payments. Include your bank details, instructions on how to pay by credit/ debit card and contact details in case they have any issues.

8. Have impact. Does your customer fully understand the implications of not paying on time? Remind them of their obligation to pay in accordance with the Late Payment of Commercial Debts Regulations 2013

By taking these steps and making sure your efforts to chase payment are working to get you paid as quickly as possible, you’ll be helping to combat against the negative effects of late payments on your business.

Want to know more about making your credit controls procedures more effective? Our credit control software, Credit Hound, provides a range of pre-written templates that have been designed with all of the above in mind, so you can start sending effective chase letters straight away. It is designed to be flexible to the needs of your business, so you can edit the letters sent by Credit Hound and adjust it to suit your business and meet your customer’s needs. For more information, visit www.draycir.com/credithound or contact your accredited Draycir Partner.

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