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Let’s state the basic facts right before we even start with the details.
- No one likes being paid late. No one!
- Even then, many businesses and freelancers shrink back at the thought of asking for the money owed to them.
At times, it’s almost like the person on one side is requesting the other one, asking them to make the payment. And let’s admit, the entire process is tiring and eats up a lot of your time, energy and at times, money.
You have a platform to sell your products, a tool to send an invoice and a dashboard that gives you an overview of your sales. However, every time a customer forgets to make a payment on time, you drop them an email, an SMS, or at times, call or send someone physically.
With everything getting easy, how can we make the process of getting paid on time easier?
Enter payment reminders! Payment reminders are a set of communication that every business sends out to their customer before the due date approaches. Often, these are sent to accept late payments too. Read this article to know everything about payment reminders.
If you’re wondering how to include profit margins and get real-time GST inclusive & exclusive rates for your goods or services you can check out our free GST calculator
Best practices to send payment reminders
Businesses today operate on different models. Some of these models are subscriptions, pay as you consume the product or content, pay as per your desire and so on. Before we get into the details of how to send payment reminders to any of these customers, let’s understand what some of the best practices for sending payment reminders are.
- When you send payment reminders, it’s crucial to include all the updated information. This information consists of the details about the product or services they purchased, the date of purchase, quantity, a description (if required) and so on
- Adding all of these details will help the receiver understand the request clearly, avoiding all possible confusions. Doing this can also help your business improve the paid rate via payment reminders, cutting down all the back and forth. Not just this, this will also help your business reduce the customer queries to a large extent
- Another vital thing to do when sending payment reminders is to offer a range of payment options to your customer. Limiting yourself to just 3 or 4 payment methods might hamper the customer experience resulting in no action on your reminder
- As a business, it is recommended to include the date of the invoice. An invoice can be upcoming or dated in the past too. Doing this helps both the business and the customer to have a record. These payment reminders also act as proof for any conflict that might occur. Ideally, a business should issue an invoice 5-7 days prior the due date
[Suggested reading: Create GST Invoices Within Minutes & Save Big on Time & Efforts]Your payment reminders and invoices, both should have your business details, GST registration number (if applicable) and other required information. Click To Tweet
Let’s quickly understand the stages at which a business should send an invoice and payment reminders to customers.
Payment reminder a week before the due date
As mentioned above, any business should send an invoice a week before the due dates. This reminds the customer about it and helps them plan their finances better. You can send the first reminder via an email and attach the detailed invoice for their reference.
Please note: While sending an email, make sure your subject line clearly states the purpose.
Payment reminder two days after the due date
Now, after sending the first mail, there are two possibilities – either your customer made the payment, or they did not. In the former case, you don’t need to write to them again. However, if they haven’t paid, give them a grace period of 2-3 days after their due date.
If there’s no action yet, send them a payment reminder via an email and SMS or WhatsApp (understand what your customers most comfortable with are).
Payment reminder 14 days after the due date
Let’s assume that your customer has yet not made the payment. In this case, it’s time for you to send another followup. However, unlike the last two payment reminders, this one needs to highlight the urgency.
Your messaging should be something around ‘Make the payment within 24 hours to avoid any legal actions.’ The idea is to remind them that late payments aren’t acceptable and the due must be cleared ASAP. You can also choose to add a late fee at this point.
Thank you email
Understandably, collecting payments is not easy. Some customers make the payment right in time, while some do not pay even after you send the 14-days due reminder.
But no matter when does your customer pay, you need to send them a thank you mail. This small gesture goes a long way in maintaining healthy relationships.
[Suggested reading: The Beginner’s Guide to Effective Email Marketing]
How to prevent late payments
Any business, no matter the size, wants to take steps to ensure that their cash flow goes uninterrupted. Plus, the amount of effort and time involved in collecting late payments snatches hundreds of working hours from their employees.
So, how do we prevent late-payments and the entire process that follows? Read on to know some of the best tips.
Sign a legal document
It is recommended to create a legal document (this can be online, too) at the very beginning of any deal, exchange of product or services and so on. This document can clearly state that a delay of X number of days in the payment can cause you a particular thing.
Businesses have seen this as an effective way to ensure that they get paid on time.
Charge a late fee
As we mentioned above, charging even a minimal amount of late fee can help you increase your payment rates and reduce your efforts of sending payment reminders.
Add this to the legal document you create and use it as a tool against late payments.
Send automated payment reminders
There are a lot of service providers that can help you create and automate a workflow. Create lists as per your requirement and let the automation do its job. You can add a buffer of 3-7-14 days in the workflow too.
Pro-tip: Make sure you have a process in place to remove the database of people who have paid after the first or second reminder. If not executed well, this can ruin the experience for your customers.
[Recommended Read: Accept Social Media Payments Securely Within Minutes]
How to create and send payment reminders
Now that you know the best practices and way to prevent late payments, let’s understand how to send payment reminders.At Razorpay, while we enable businesses to accept digital payments via multiple modes and ways, we also ensure that we assist them in following processes like sending payment reminders. Click To Tweet
[Recommended read: Collect payments faster with the all-new powerful Payment Links]
Razorpay Payment Links now comes with automated reminders, which are arranged by the system based on the payment status of the link. These computerised reminders will help you do the following:
- Increase the number of paid invoices and links
- Reduce cost and manual effort required to collect payments
- Reduce the number of days taken by your customer to make the payment
You can choose to schedule the reminders based on the date of sending the payment link. Alternatively, you can set an expiry to the payment link wherein you can have the payment reminders sent before the payment link expires.
“Schedule a reminder one day before expiry”.
“Schedule a reminder the day after you send the link”.
Razorpay payment reminders can be sent via an SMS or an email or both.
Please note: These payment reminders will be sent at a time in the day based on our analysis of the payment patterns that we have noticed across a wide range of consumers and industries.
With this payment reminders feature of Razorpay, we can assure you that you will be a lot more peaceful while getting a lot more time to work on other business needs.
You can use Razorpay ePOS app to create, track and automate your payment reminders process. With digital India, we are empowering businesses and individuals to accept secure payments with ease, anytime anywhere.
We have recently introduced a chrome extension for Razorpay Payment Links. This lets you easily create and share a payment link with your customers right from your browser window. The only prerequisite is to have an active Razorpay account.
[Read more: Introducing the Payment Links Chrome Extension]
What are some of the other ways and methods you follow to accept payments on time? Let us know in the comment section below!
Don’t use Razorpay Payment Links yet? Start collecting payments without a website or app today!