Is your business getting lost in a never-ending pile of unpaid invoices, whether in paper or digital format? It can take days to weeks to wade through them and reach out manually to every client, a time that could be implemented in your every task. Making separate phone calls or sending unpaid invoice emails is frustrating but also a drain on a large amount of your resources.
“If you are finding it hard to stay organized with your daily tasks but also chasing down clients on overdue payments, well you might want to start thinking of smarter ways.”
Imagine: It’s a bright Monday morning, and you’re gearing up to conquer the week. After checking your inbox, the subject line of the email, you open reads: “Account Overdue.” Immediately those best-laid plans for a productive start to the week are lost forever. And you feel a pang of concern – this account needs some attention. What should you do next?
To be ideal, you would have received a payment notification, but the silence is creepy. You click on the email, read through the information, and realize that the balance not paid could be used to fund your business with new capital instead of employees paying rolls or basic operational expenses. You sigh and realize you are going to have to do a follow-up with this customer. If we consider the recent statistics by Atradius about unpaid invoices: “According to a 2023 study, a staggering 55% of B2B invoices in the USA are overdue.” This is an important statistic that can only show late payments are everywhere. A business that has more than 5 of its invoice’s unpaid causes an impactful glitch in the cycle. It not only creates cash-flow shortages but also causes you to take more time between paying your vendors and impedes the growth of these businesses. Its impact stretches far and wide, endangering your financial well-being for years to come. In 2023, chasing unpaid invoices felt like an endless struggle with old methods that didn’t work. Your stress levels soared, and cash flow remained stagnant. But 2024 is your chance to change the game! Here’s how:
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7 Tips on How to Collect Unpaid Invoices
Establish Clear Payment Terms
Have you ever considered establishing clear payment terms with the clients so you both remain on the same page? If not, then you should start it as soon as possible to avoid any confusion. It is the best way to collect unpaid invoices. When your clients know exactly when and how to pay, there’s less room for misunderstanding. Make sure your payment terms cover:- Establishing Payment Terms: Clearly, state when payment is due – whether it’s upon receipt, within 30 days, or another time frame that suits your business model.
- Acceptable Payment Methods : Mention clear payment acceptance methods like credit cards, bank transfers, or online payment, and specify the methods to avoid confusion later.
Prompt Invoicing
Sending invoices as soon as possible is a must to avoid any delay in the payments. This step should be taken very promptly as it encourages prompt and fast payment. The longer you delay or wait for the right time, the easier it is for the client and your team to forget the transaction. This can result in an unpaid invoice after 30 days or more as it will directly affect the revenue. The market has introduced many automated and intelligent prompt invoicing software & platforms. These platforms are designed in a way that promotes prompt invoicing action, a very easy task as they are well integrated and do not miss quoting the payment methods – which is done automatically.
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Follow-Up Reminders
Follow-up reminders are as important as the above tips Yeah, sometimes clients plain forget to pay. Sometimes a little reminder is all they need. Here is how to do it the right way:- Remind Customers of Payments Owed: Begin with a soft reminder email a couple of days before the due date.
- Payment Due Reminder Message : Send another message saying that if the invoice is not paid by a certain date let you know.
- Collect Call:Just a friendly reminder to let your client know payment is due; keep it professional, but also take this opportunity to assert yourself.
Implementing Late Fees
If unpaid invoices are a recurring issue, it might be time to implement late fees. But why implement a late fee? Or how to send an unpaid invoice to collections with late fees. Why implement a Late Fee? Unlike any other subscription plugin, the subscription box control allows you to set up late fees to deter clients from staying capped at a strangely same limit and paying on time. You must have this policy communicated and clear in your payment terms. Automated platforms for unpaid invoices also provide automated platforms that can implement late fees or taxes by themselves.Offer Flexible Payment Plans
Sometimes, clients might face financial difficulties that prevent them from paying the full amount at once. Offering payment plans can be a win-win situation: Negotiating Payment Plans – You can start by discussing the possibility of breaking down the invoice into smaller, more manageable payments. What does negotiating a payment plan mean? – It means working with your client to come up with a mutually agreeable payment schedule that ensures you get paid while accommodating their financial situation.Consider Offering Payment Discounts
This is another method that can make a big difference. You can limit this by incentivizing early payments. Offer an early payment discount to encourage clients to make your invoice a priority over others.- Early Payment Discount: You can offer a percentage discount from the invoice total for payments received within a certain period. One of the early payment discount examples can be: You can provide 2% off means if the invoice is paid within more than a week after issuing the receipt.
Use Collection Services When Necessary
If a repeated notice still faces non -, you may want to engage the assistance of a professional debt collection agency. First, how would you refer unpaid invoices to collection?- Sending an Overdue Invoice in Collections: – For this, you might need an expert from a debt collection company which can be thought about on the way to recovering your quantity without spending out of pocket.
- Collection Experts A professional debt collection service will resolve the matter on your behalf, thus ensuring that you get paid without ruining a perfectly good business relationship.
