A common problem businesses face is having to chase up unpaid invoices from their clients. Reminding your clients to settle the invoices is not just putting you in an uncomfortable situation, but it also wastes valuable time you could spend developing your business. In this article we will discuss the common reasons why clients fail to pay invoices on time and what you can do to stop it.
There are numerous reasons why your clients have no paid you on time. It could be as innocent as being forgetful because they are too busy. Perhaps you had even forgotten to invoice them or sent it to the wrong client (this isn't an unlikely occurrence in business). However, your client could also just be in dispute with the amount invoiced and is simply avoiding paying it.
No matter what the reasons why your invoices aren't being paid, late payments greatly restricts the growth of your business. That is why we have put a little list of the things you can do to ensure your invoices are paid on time and how to chase them up in the most time effective way.
When having to follow up with a client about an unpaid invoice, you face chasing them away entirely. Although you have every right to ask for what you are owed, discussing issues with your clients may push them away. An effective and non-threatening way to bring this up to your client is to send a friendly email reminder when the deadline for the invoice is approaching or has past. It does not require your client to explain their reasons why the payment has yet to be settle, but it makes it clear that you are both aware of the situation.
If after the email reminder your client still hasn't settle the invoice, you can follow-up with a phone call asking if they had received the email. Again this prompts them to make payment in a non-threatening manner, keeping your relationship with them positive.
If you have already tried these two methods and your client still hasn't paid, we suggest writing them a statutory letter or email. In the notice you should stat that if the invoice isn't paid within a certain number of days you will add a statutory interest (8%),plus the Bank of England base rate for business-to-business transactions, which is currently 0.5%. So, the total statutory interest payable on the invoice would be 8.5%. With the statutory interest rate in place, your clients will be more likely to make payment before they face a higher charge.
Finally, if your client still won't settle the invoice, you can always get in contact with a debt collection agency. These firms are specialised in dealing with this matter and will save your business time and money wasted on trying to collect them amount yourself.
There are many challenges that come with managing a business. No matter if you are large or small, you will be faced with issues like these. At PNG Formations we help businesses of all sizes manage and grow their business with our variety of services. If you want to find out more information about what you have read here or about our services, please contact one of our experts here today.