Unpaid invoices can seriously harm and oftentimes destroy a business. Not getting paid on time, or not getting paid at all can impact a business’s cash flow and have an adverse effect on their success. For businesses of all sizes, receiving payments on time is critical to moving your business forward and continuing day-to-day operations. Here are some tips you can use to collect the money owed to you:
1.Write a request for payment
Step one should always be to write the customer in question an email or letter, requesting payment. Be polite as there may be a legitimate reason as to why the payment is late, you don’t want to jump to conclusions at this stage. Specify the invoice number, the amount owed and when you can expect to receive payment.
2.An official invoice overdue notice
Locate the original invoice and stamp a nice large ‘overdue’ notice on it. Make the ‘overdue’ nice and big, and nice and red so that it is the first thing noticed when opened.
3.Pick up the phone
It’s easier to avoid an email than a phone call. Once you have them on the line, it’s difficult for them to run away. Use this as a follow up to an email and outline everything you have sent to them already i.e. invoice number, the amount due and when you can expect payment.
4.Charge an additional fee
Ensure you have a late-fee policy in place that was communicated to the customer upfront. If you have this in place, give the customer a call to remind them that if payment isn’t received by the due date, a late fee will be enforced.
5.Pull together a statement of accounts
If the customer is a repeat offender, it is worth gathering all their outstanding invoices to summarise into a single document. This can serve as justification as to why you’re concerned about the late payment in question, given their poor history of paying on time
When things get sticky it’s time to bring in the big guns. Debt collectors will do exactly what their job title entails…collect your owed debt. You will have to pay them so use this as one of your last resorts.
7.Bring in the Lawyers
If the amount owed is large enough, it could justify a lawyer getting involved. You’ll need to weigh up the cost of hiring a lawyer vs. the money they’ll collect for you.
There are plenty of options for you to recover those unpaid invoices. While following the above steps will help, it’s just as important to have the right procedures in place to minimise late payments from happening at all.