What to Do if Goods or Services Have Not Been Paid For
What to Do if Goods or Services Have Not Been Paid For
A business relies on its cash flow to maintain and grow.
Issues such as non-paying clients can affect this, and if this happens the entire company can be put at risk.
This is a constant headache for business owners, and as such, they take the issue of what to do if goods or services have not been paid for seriously.
At Federal Management, we speak to hundreds of business owners who have not been paid for their services every week.
There are many reasons for this, but regardless of this…
…if you have provided goods or services, you deserve to be paid for them.
We asked our debt collection experts to help people understand what should happen if someone does not pay you for what you have provided.
Goods or Services Have Not Been Paid For – What You Can Do
Over our long history, we have dealt with countless cases where goods or services have not been paid for.
It is common for a client who has received any service to dispute an invoice.
Many people are determined not to pay and will go to the ends of the earth to avoid doing so.
If someone is doing this, then the only goal should be to recover the money as quickly and appropriately as possible.
Business owners know this all too well, and the matter of credit control is a key part of most modern companies.
Most credit control teams will follow similar processes, and in some cases, they are successful in recovering money that is owed.
Whilst this is an effective measure, there will still be those clients who cannot be reasoned with.
It costs both time and money to recover a debt in-house.
The time your credit control team spends on chasing a debtor could have been used for something else that grows your business.
Despite their best efforts, the matter may still need to be escalated.
During this next phase, more time and money will need to be spent to recover the funds that have been lost.
You can take several steps to reduce the impact of a client that has not paid for goods or services.
The best way to deal with an issue of debt is to take steps to prevent it from occurring in the first place.
Payment terms are an excellent way to do this and can help businesses with any debt recovery issues in the long run.
Payment terms are documents that are discussed before an arrangement takes place.
For example, if a business leases a car, lots of terms and conditions need to be looked over and agreed on before the deal is finalised.
These terms make it clear to the customer what their obligations are on payment.
As well as this, if any payments are late or not made, then consequences are made clear.
Once everything is explained, both the supplier and customer must sign to confirm that everything is understood.
This is very useful, as the client has confirmed that they understand their payment obligations on a legal document.
Your business’s payment terms need to be clear, and you should always get the client to sign them before moving forward with an agreement.
If your client later withholds payment, you can remind them of what they agreed on with your payment terms.
Late payment charges can also be included within these terms.
This provides an incentive for clients to pay on time and reduces the risk to your business.
If the client wished to dispute the payment and things were escalated, you would have proof that they agreed to pay you.
Sending letters to a client that has not paid for goods or services is a good idea, but if they are ignored it is time to escalate the matter.
Contact the Client
The first part of any collections process is to reach out to the debtor to request that payment is made.
Throughout all communications with the client, you must maintain a professional manner and tone.
It is very easy for people’s emotions to come into play, but if a conversation turns into an argument it may make the task of recovering the money harder.
If goods or services have not been paid for, the best ways that you can contact a client are:
- Email (with a ‘read receipt’)
- Letter (sent via recorded delivery)
You should not contact your client outside of reasonable hours, and you should limit the number of attempts per day.
Failure to do is a serious issue, and ‘spamming’ your client will only make the situation worse.
If this happens, they may claim that you are harassing them, which could lead to police involvement.
It is important to remember that ignorance is not an excuse.
Ensuring that you are only speaking to your client politely and professionally is the best approach to take.
Instruct a Professional Debt Collection Agency
If you have followed the steps above, your client still refuses to pay for the goods or services you have provided…
…it will be necessary to escalate the matter.
There are 2 main options for this:
- Debt Collection Solicitors
- A specialist debt collection agency
Debt collection solicitors were once considered the main way people could collect debts.
Whilst this method is sometimes effective, it is very expensive – both in time and money.
For instance, court action can take a very long time to process, and there are lots of documents that the claimant must prepare in advance.
Solicitors can charge high rates for their services, with some expecting as much as £200 per hour.
Or, a professional debt collection agency can enforce your debt collection at a low cost.
A debt collection agency is the best way of recovering your money.
Federal Management is the UK’s number one commercial debt collection agency.
Since 2004, we have helped countless businesses recover the money they were owed from providing goods or services.
We are regulated by the Financial Conduct Authority (FCA).
This gives our clients peace of mind that we provide the most professional service possible.
As well as this, we operate on a fixed cost basis, with commissions beginning at 6%.
If your goods or services have not been paid for, speak to one of our friendly debt recovery agents today.
We will provide a free pre-action assessment of your debt, giving you a clear idea of your options.