Business Writing: Collecting on Your Invoices
No matter how carefully invoices and contracts are written, every consultant, freelancer, business person, and entrepreneur has trouble collecting money at times. How to maintain a good relationship while pressing for payment?
Minimize the risk of losing your money and/or customer by asking for a retainer on signing, no matter how much you trust the person you’re dealing with and how steady a client she has been. People are known to leave jobs and those who replace them have been known to prefer suppliers of their own, or bring the work in-house.
Companies have been known to go out of business and file for bankruptcy without warning. You may also encounter disputes about whether, in the buyer’s opinion, you delivered to the standard expected.
No one with honest intentions will ever fault you for acting in a businesslike way to protect yourself by requiring an advance. And don’t lay the groundwork for cheating yourself if the nature of the work means you’ll do a major portion in the beginning, like coming up with ideas or creating the blueprint. Set up the payment schedule to cover this aspect of the job should the agreement dissolve. A contract is only as good as the parties’ willingness to live up to it. If a client doesn’t like what you produce, legal enforcement may not be desirable or practical.
When payment is running a little late, minimize resentment by saying as little as possible in a perfectly neutral, blame-free, impersonal tone. Make the person you’re writing to a partner in the collection effort:
Subject: Can you help?
My payment for the Tyler project hasn’t come through yet, though the work was finished two months ago. Is it possible for you to nudge the machinery a bit on my behalf?
I’ll appreciate it very much. —Marty
Subject line: Friendly reminder
I’m wondering if it’s possible to speed up the processing of my second check for the Curio Design work. In line with our agreement it was due September 4 but has not arrived.
I’ll appreciate your help with this.
There’s never a reason to plead poverty. Don’t say you need the money to pay your bills. Late payment messages work better when they are impersonal. The same minimalist approach is useful when you bear some responsibility. A friend was embarrassed to discover that she had neglected to deposit a check and it was too old for the bank to accept. She wrote to the client:
Dear Mr. Black:
In tracking invoices and payments for tax purposes, bookkeeping has brought to our attention that your check #9174 written on January 12 of this year was rejected by ABC Bank due to endorsement requirements.
Our records indicate that the check was not redeposited.
Attached is a copy of the check that was not credited to the Marketing Pro account.
Would you please issue a new check to replace the one that was originally provided?
We apologize for any inconvenience this may have caused.
Assuming the editorial or kingly “we” along with the formal tone depersonalizes the request and presents it as a glitch between bureaucracies, though the writer runs a very small company from a virtual office.
Sometimes, however, a true “letter of record” is called for to document an event or problem or present your claim more formally. This kind of letter may have legal implications that involve lawyers. You can try a strategy to keep in your back pocket for severely late payments and other confrontational situations: a chronological accounting. Here, it’s all about the facts.
Marshal all the relevant bits and arrange them in a timeline. Then create a letter that simply marches down each item on your list in a dispassionate, matter-of-fact way: no frills, no flowery adjectives, no emotion. Start each item with the date.
Suppose you’re an independent graphic designer and a client hasn’t paid your last bill, which was due six months ago. He now hints that the work wasn’t done to his satisfaction and won’t take your phone calls. You don’t want to go to court, but you do want your money.
Your letter can go this way:
On July 6 of this year, you contacted my firm, MorningGlory Design, to inquire about website services for your firm, Thompson, Ltd.
On July 8, we met at your office for two hours to discuss Thompson’s needs and goals.
On July 15, I sent you a summary of our conversation with our suggestions for a website to meet your specifications. You called and said “I like the approach very much, go ahead.”
On July 22, I sent you an agreement specifying that MorningGlory would provide the services outlined (see attached contract pages 1 and 2) at a proposed fee (see attached contract page 3) and a schedule of payments.
On July 22, we both signed the contract. You remitted the one-third payment due.
On August 10, I presented the preliminary design. You said “with some revision it would be exactly what I want” and that you’d mail the second payment at week’s end.
On August 19, I presented the revised version based on your input. You said, “It looks fantastic, let me take a more careful look with my staff, and I’ll check about the payment you didn’t receive.”
And so on. Further entries might include the dates the invoices were sent, when the new web design went live, and every other relevant detail — the more, the better. The close:
In sum, I have met every obligation of our contract in a timely manner and with your full approval. The site is online exactly as I designed it. But six months later, you have not paid two-thirds of the fee to which you agreed in writing. Kindly remit the balance owed immediately.
Very truly yours, Natasha
This may one of the only situations where you should use a stilted, formal language with an archaic tone. Such a letter sounds as if a lawyer is advising you. Or at the least, your reader will recognize that you have a good case and are prepared to seek legal redress. If Mel doesn’t come through and you decide to take the legal route, your letter becomes part of that process and serves you well.
The approach works just as nicely when you’re on the other side of the fence. Moreover, if you don’t want to pay an unfair bill and clearly state that you have no intention of paying, the other party’s recourse may be limited, depending on the state you live in.
Underscore your letter’s legal undertones by mailing it — or better yet, certify it and require a signature to prove receipt.