In a business, cash flow is vital. Whatever type of business you have, the cash flow gets wrecked when an invoice is late. No matter how much someone owes you, it is a huge hassle when it doesn’t get paid on time and you have to deal with unpaid invoices.
It is also a bad practice to always experience late payments. Dealing with this kind of situation can be challenging because you want to maintain a good relationship with your partners. You need to learn and come up with a strategy to help you deal with it.
The best way to deal with unpaid invoices is by preventing them before it even happens. Don’t let your clients forget the due date. Make sure you clearly state when is the schedule for the payment. Include it in the invoices, so they’ll be informed. It is also essential that there is a contract between the two parties on how to settle invoices.
To encourage them to pay earlier, you can also give a discount. For example, if they pay a week before the deadline, they get to pay ten percent less.
This tip could also be a preventive step. You can tell your clients that there will be late fines depending on how long it takes to settle their outstanding invoices. This strategy can motivate them to pay on or before the due date because they don’t want to pay extra fees.
This will also help you. You depend on their payments to pay for your bills and debts. Late invoices will disrupt your cash flow and possibly cause problems. The additional late fees will help you fix financing issues.
The first step you can do whenever a client forgets to pay their invoices is by giving them a follow-up. Let them know that they passed the deadline. You can do follow-ups by sending them an email, an overdue invoice, or a statement of account.
Keep in mind to be friendly or neutral when reminding them. There might be a good reason why their payments are late. It is stressful, but you shouldn’t get angry at them immediately, especially if it’s just a first experience with that client.
Also, do not feel shy about following up on a due date. You have the right to demand the payment. Asking someone to pay their debt is uncomfortable, but it’s a must in the job.
Suppose simple emails and messages don’t work. You should call them. Reminding them over the phone would ensure that they get your message.
It is hard to keep up with payments. There might be a sudden issue that caused your clients not to give the money on time. You can try to help them out.
If they can’t pay everything all at once, allow them to pay you slowly through installments. This way, you still get cash, so your cash flow can continue. At the same time, your clients’ debt wouldn’t grow and burden them.
These are just initial steps you can do when someone doesn’t pay on time and you have to deal with unpaid invoices. It is best to prevent this situation in the first place, but you should be prepared to do what is necessary when it does happen. If these tips don’t work, you might want to take legal action and file a complaint against the one who’s withholding your invoices.