Starting your new allied health business is such an exciting time. You go in with so much passion, ready to help your clients. You have set up a beautiful space, you have the equipment and resources you need, you have a booking system and website ready to go. So, you open! At first, things are great. The first few months go by in a blur.

Then suddenly, you see that you have a few outstanding invoices – “no problems”, so say, “people get busy and forget, I’ll just send them again and it will be sorted”.

But what happens when they don’t pay? They ignore your repeated emails or give you excuses and tell you they’ll pay soon? What happens then? Do you have a process to follow when dealing with non-payment of invoices?

A key element a lot of small business owners forget to set up or follow through with are payment terms and a set procedure to follow. We like to think the best of people and that everyone will pay on time. Unfortunately, this isn’t always the case and chances are, that at some point in your time of being a business owner, you are going to come across this issue.

So let’s talk about how to reduce the likelihood of this kind of issue turning into a big problem for you.

Before you start taking on clients, the best thing to do is to come up with your payment

  • Choose a length of time for payments to be made, eg: at time of service, 7 days, 14 days etc.
  • Know your methods of payment and have them set up, eg: EFTPOS/HICAPS terminal onsite or online, direct deposit into bank account, cash etc.
  • What methods of payment won’t you take? Eg: cheque, certain types of cards etc.
  • Ensure your payment terms are set up in your practice management system (PMS) to appear on your invoice.
  • Ensure any staff you may have know these payment terms as well.

Once you know these and have set them up in your PMS, you need to work out what process you would like to follow in the case of an unpaid invoice. You will need to work out when and whether you want to pause and/or terminate services at a certain point of non payment or repeated late payments, when and whether you want to enlist the services of debt collectors, legal action and for those who are NDIS participants: making a formal complaint to the NDIS.

The below is an example of a process on how to deal with unpaid invoices, based on 7 day payment terms.

  • Day 8, friendly reminder that the invoice was due yesterday and to please make payment to avoid pausing of services.
  • Day 14, second reminder sent stating that services will be paused if payment is not received within 2 days.
  • Day 16, no payment received, email sent informing that services are now paused until full payment is received.
  • Day 30, no payment received, email sent informing that services will be terminated if payment is not received within 2 days.
  • Day 32, no payment received, email sent informing that services are now cancelled. Inform them that if payment is not received within 2 days, you will be enlisting the services of debt collectors, potential legal action and if an NDIS participant: the lodging of a formal complaint.
  • *In between these, you can also make phone calls or send texts to ensure you have covered all bases. Always ensure you document the communication with the date and content.
  • *It is important to also add into your payment terms that the client will be liable for any fees or costs associated with debt collection or legal action required to recover the unpaid sum.

The last part is to ensure you have included the payment terms and your process to follow up unpaid invoices are listed in a document or contract that they client can sign to agree to. For NDIS participants, this can be included in the Service Agreement; for other clients, you can have a payment agreement form for them to sign.

It is vital to ensure that all forms and contracts are signed by clients, ideally before their first appointment, or very soon after. If they don’t sign or won’t sign, services cannot continue until all necessary forms are completed. This action alone makes your life a lot easier, as you can easily prove that the client agreed to your payment terms, knew the consequences and is therefore in breach of their contract or agreement.

It can be a daunting thing to try and ask people to pay, but if you can set up a process from the start and stick to it, then chances are, you will have left troubles with debts piling up causing you stress. So many business owners are hesitant to have strong boundaries when it comes to overdue payments and are more likely to just let the debt go and chalk it up to a bad experience. When you care about your clients, it can be hard to enforce the process, but you need to, for your own mental and financial wellbeing. Better to be chasing up a few hundred dollarsover a few thousand!