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A Guide To Handling Unpaid Invoices

by Martin McMullen
December 16, 2021
in Business
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A Guide To Handling Unpaid Invoices
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Whether small or big, running into debt is a nightmare for every business owner. The tension between customers and suppliers when invoices have been long overdue without payment can have a negative impact on the business. How can you handle unpaid invoices? this Guide to Collecting your Unpaid Invoices will highlight some tips to help.

Tips on avoiding unpaid invoices

Business owners cannot eliminate the issue of unpaid invoices, but they can avoid accumulating these bad debts through the following ways. 

Find out about clients financial status

Checking your potential customer’s financial status can help prevent unpaid invoices. this research should include; client’s current financial status, the client’s organizational skill, the client’s reaction to rates, the client’s background, and the client’s third party.

Draft and sign a contract

The legal processes involved in drafting a contract might sometimes discourage business owners as some may view it as a waste of time, resources, and energy. Drafting a contract shouldn’t necessarily be time-consuming, all business owners are advised to have at least one lawyer saddled with the responsibility of the company’s legal work. A contract would act as written legal proof ensuring that the client did agree to the terms of payment.

Outline your expectations

Make realistic expectations and ensure that your client understands them. These expectations may include; time of payment, payment method, contingency plan, and consequences of late payments.

Be time conscious 

When all three tips above have been implemented and the deal settled, business owners need to issue invoices on time. The longer it takes, the more your chances of not getting paid. 

Tips for collecting unpaid invoices 

Having highlighted ways to avoid unpaid invoices, let’s look at ways to collect these invoices from clients who still consciously or unconsciously refuse to pay up. Send a friendly reminder 

Sometimes people get so busy working they tend to forget. Sending a reminder note via email or text can be helpful. Automate your devices to regularly alert you on the days for sending these reminders. It is important to keep the tone polite and professional, violence or threats will certainly escalate the issue. 

Always Follow up 

Following up is not necessarily just calling to ask about payment. Most times checking up on clients does help, this way the client assumes that you aren’t all about the money (which you probably are). The goal here is to maintain a healthy relationship between supplier and customer. 

Allow part payment 

Your client is probably going through some serious financial burden, allowing the part payment method would help reduce whatever financial burden your client has, this way business owners can still get paid over an agreed period. 

Take legal actions 

If the above steps yield no results, step it up by taking your client to small claim courts. The thought of legal proceedings should be enough to scare your client into paying, if not, then let the law take charge.

Conclusion 

It is important for business owners to collect unpaid invoices as the accumulation of these would eventually lead to bankruptcy. The measures outlined above would help the collection of these debts. 

Martin McMullen
Martin McMullen
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