Q: One of my customers hasn’t paid their bill for my IT services, and I’m not sure how to approach them about it. What steps should I take to get my customer to pay their bill? Are there any particular tactics that work well for other MSPs?
Having to chase down customers for their payments is an unfortunate reality for almost every business. Whether it’s because they forgot to update their account with their new credit card number, they can’t pay the bill right now, or they’re unhappy with the service, this happens to us all the time. While it can be stressful, there are a few tactful ways to approach customers to make it a smoother process (and get paid!).
When we got your question we knew we had to talk with Stephen Semenza, Finance Operations Manager at Intronis MSP Solutions (and resident ping pong master!). Stephen works with MSP Partners on a daily basis alongside our finance, technical support, and partner management teams, and every so often he also has to remind our Partners that their payment is due. He has a personal and effective method for working with our Partners in these situations that focuses on building a trusting relationship with each Partner.
Stephen suggests following these four steps to get your customer to pay their bill:
A four-step process
A four-step process1. Send a friendly reminder
As I’m processing our Partners payments at the end of each billing period, there are inevitably a few companies that are running behind on their payment. This isn’t a reason to get alarmed, but you should reach out to ask what’s going on. I suggest first calling to see if a quick call takes care of the issue, it usually does in my experience. I’ve found that calling them directly feels more personal and works best in getting the customers’ attention. If you still haven’t reached your customer after two calls, try sending a friendly email at the end of the billing period reminding them of the payment. I’ve seen many times that it was simply overlooked.
If they don’t respond to the first message within a week, I’d then suggest sending out another email along with a letter in the mail. In these messages, let them know the attached invoice is due and ask nicely why they haven’t paid. Also, be sure to note that you’re here not only to collect the payment but also to help answer any questions or concerns they might have about their service. If they are experiencing an issue with their service, explain that you’re there to help connect them with the appropriate internal resources to get it resolved.
It’s important to offer to help your customer in this early correspondence because there’s a chance that someone at their business updated their credit card information and simply forgot to update their account details. I like to research their account information before reaching out so that I can provide them with the information they need to get the payment processed and make it as simple as possible for them.
2. Escalate the issue
After you’ve sent a few friendly reminders of the due payment and still haven’t received any response or payment from the customer, you’ll want to escalate the issue. I usually take this action after a short grace period, giving them the time to respond and submit their payment.
At this time, you should now do some research to figure out who handles their finances. For example, there could be a dedicated accounts payable person, a controller, or an owner who pays their bills. If you’re not getting anywhere with your contact, try reaching the next highest level of the company. Depending on the size of the small business, this person could be the director of finance or the business owner. Find out who makes the decisions and try to get their attention.
3. Suspend their account
If none of those efforts are satisfactory, it’s time to take further action. I hope it doesn’t come to this, but you’ll need to prepare to freeze their account and the services they’re receiving from you and let them know there’s going to be an interruption in their service until their bill is paid. This tactic is usually effective because the warning alone is often enough to get the customer to pay attention.
Beyond just sending an email, you should also call their business directly and send an official mailed letter with your company’s letterhead. If you still don’t receive a response and payment from the customer, then shut off their service temporarily. Continue to run backups on their data so that they don’t lose any critical information, though. Hopefully, this temporary halt in their service will get them to pay and then you can easily turn everything back on for the customer.
4. Employ a collections agency
The final step in the collections process— and truly a last-resort tactic—would be to solicit the help of a collections agency. At this point, there unfortunately is not much else you can do; you’ve already attempted to contact the customer through multiple avenues. Before you hand things over to the collections agency, send the customer notification that tells them about the ramifications of not paying. Remind the customer that you have a signed contract and will be sending a collections agency to handle the issue going forward. Hopefully, this step will get your customer to comply, particularly because employing a collections agency will damage the customer’s credit score.
After you’ve notified the customer of the ramifications of not paying, you could also take their business to small claims court. Let them know that their case is being sent to your MSP’s legal counsel for review and hopefully this will scare the customer enough to respond and sort through the issue.
Stephen’s tips for an easier process
In addition to his four-step process, Stephen had a few tips to share to help your MSP business successfully collect payments from your customers.
Use email
When you’re reaching out to these customers, always use email as the main form of communication. Even if you’re calling and leaving voicemails or sending formal written letters, follow up by email so your MSP business has visibility into all correspondence. Also, if you’re documenting everything in email, you can always reference those messages later on.
For example, if your customer comes back to you after you’ve halted their service and says, “Oh, you never told me I owed anything,” you can quickly reference past emails and share those as proof. Using email leaves a good audit trail for both you and the customer.
Remind your habitually late paying customers
Unfortunately there could be customers who are continuously late submitting their payment. These customers might not have the internal resources to stay on top of their finances, so try to help them to make their payments. For example, if you’re billing a customer monthly, set a task in your calendar to check in with that customer just before the payment is due.
I try to take a helpful approach rather than being demanding. For example, I’ll reach out to these customers saying “I need your help. Can you do me a big favor and make sure this payment gets processed? Is there anything I can do to help you get that done?” I recommend encouraging them to set up a reminder on their end, too.
Simplify your billing process for customers
Another way to help your customers make their payments on time is to simplify your billing process. Make it easier for them to quickly reference how much they owe, view invoices, and make a payment online. For example, Intronis Partners can simply log into the Intronis ECHOplatform portal to pay their bill. Under the “Pay Bill” tab, you’ll be able to view invoice details, pay invoices, and estimate bills. Additionally, you can easily reference which of your customers are assigned site licenses in the “Manage” tab.
Following Stephen’s tips, you should be a few steps closer to getting your customer to pay their bill. Remember to offer them help and try to build a trusting relationship so that they’ll be more willing to work with you to resolve the issue. At the end of the day, the customer might just need a gentle reminder of their bill so dedicate the time and resources to reach out.
Ask an MSP Expert is a weekly advice column answering common questions from MSPs and IT service providers. It covers topics ranging from pricing and selling to marketing and communications—and everything in between.
Photo Credit: Pictures of Money via Flickr. Used under Creative Commons 2.0 liscence.
