Unpaid Invoices – Getting them paid in 2023
Getting Unpaid Invoices paid
Getting Unpaid Invoices paid is crucial for any business in 2023. When you have provided goods or service for a client, you expect payment. That is how the conventional wheels of commerce turn. If you are reading this then you will already know that this is not always the case.
Withthe economic climate still turbulent, the collection of unpaid invoices is of massive importance. Any overdue invoices should be acted upon urgently. Thousands of SME’s have folded because they did not act quickly enough on unpaid invoices. An unpaid invoice is a threat to any Small businesses existence and should be treated that way.
An invoice becomes overdue once you are one day over the usual 30-day payment term. If you have not received payment within the agreed terms then this can be categorised as a late payment. From this point, any time spent chasing payment becomes lost and effective costs your business money.
This is counterproductive as this unpaid invoice payment should be sat in your Company’s bank account.
Having a healthy cash flow is critical to any Small Business or SME. In fact, you will find the most affluent companies have the most stringent credit control. You have provided goods and/or services on time, it is natural that goodwill is repaid. Customers are the first to complain if delivery is made late.
So therefore the same logic should apply when it comes to Invoice payment. Of course, it doesn’t, but think about it. It is the same principle essentially and cannot be overlooked.
Hundreds of thousands of Small Businesses collapsed in 2019, deemed as Insolvent. It is safe to safe a fair proportion of those will have been down due to inadequate Credit Control. Some Businesses still fail to proactively act when they encounter non paying customers. Unpaid invoices are the silent killer for SME’s and will continue to be so unless action is instigated.
With hundreds of years of combined experience, we know a thing or two about Business Credit Control. Our specialist Business Debt Recovery team have put together some simple tips to maximise your strategies. This will help you keep unpaid invoices to a minimum.
8 Step Action plan for chasing Unpaid Invoices
- It is acceptable to chase unpaid invoices – Any experienced Business owner will tell you that this is totally acceptable. Whilst gaining confidence, it can feel ‘rude’ to ask for overdue payment. This should not be the case. You have provided the goods on time, now its time to pay on time.
- Make payment terms clear at outset – Clearly outline your terms on which the provisions of your services are based. It will avoid any uncertainty or confusion. Most companies tend to opt for the standard 30-day terms in the UK. This is the norm for most SME’s whilst larger companies may prefer 60-day terms.
- Include Late Payment charges on your terms – This can deter customers and clients from late payment. Commercial Late Payment legislation allows you to charge up to 8% interest plus the Bank of England base rate on late payments. You can also make a provision within the terms of additional Debt Recovery costs in the event of non-payment.
- Never get stressed – Easier said than done right? But stay calm. When an invoice is not paid on time, the temptation is to think the worst. There are many legitimate reasons why an invoice payment is late but it is usually down to forgetfulness. It is always advisable to give it a couple of days before prompting them. Unpaid Invoices have even been shown to affect Business owners health.
- Send a courtesy reminder – Any initial payment reminder should be courteous and polite. This is your customer and at this point, a respectful letter or email to remind them that payment is due will do the trick. This normally does the trick and your invoice will get paid.
- Follow up your reminder – If your payment reminder has not had a response, then you should send another. This should clearly outline the status of their account and the outstanding invoices due. This email/letter should still retain a professional and polite tone along with your request.
- Get on the phone – If your polite prompts for payment have been ignored then its time to reach out via telephone. Engaging your customer this way will give you immediate answers. You will then know when your invoice is to be paid.
- What if there is still no payment received? Not only have you delivered the goods/services, but the matter is also now costing you in terms of time and resources. As stated earlier, you have delivered on your promise of supplying what they wanted, now it is their turn. You will need to consider what action you will take from herein. ‘Overdue’ has now become ‘Unpaid’ and therefore a different approach is needed.
Main options to collect Unpaid Invoices
Use a Debt Recovery Agency
This is a growing solution for many businesses across the UK and globally. The collection of unpaid invoices is a daily task that many are proficient in dealing with. It is important to remember that not all Debt Recovery services are the same.
You need to compare apples with apples. Choosing a Debt Collection Agency to represent your business is a decision that should be made wisely. They will be an ambassador for your business so you need to consider their Professionalism. Also, understand the cost and time frames in which they operate.
What actions will be taken and what are the prospects of success. Any reputable and appropriately accredited Debt Collection Agency will be forthcoming on those points.
Taking the Legal Route
This well-trodden path is deemed as too expensive for many. It can be protractive, costly and comes with no guarantee. Court costs and Solicitors Fees are more expensive than ever. It can cost thousands of pounds in legal fees alone, simply to obtain a CCJ or High Court Judgment.
It still then needs to be enforced if payment is not made. Then you would need a Debt Recovery Agency or suchlike for enforcement of the unpaid Business CCJ.
How can we help?
Federal Management is the UK’s leading Business Debt Recovery service. We specialise in Maximising results whilst minimising the cost of recovering unpaid invoices. From Wholesalers to Football Clubs, we have helped a huge amount of Businesses over the years. Here are just a few key points of what makes us the First choice for thousands of UK Businesses
- Multi-Award Winning and Accredited service
- Low Commission rates starting from only 6%
- Accelerated Debt Recovery processes
- Free Expert pre-action assessment and analysis
- Local, National and International services
- Fully comprehensive Debt Recovery and Low fixed Fee
- Regular Progress report & dedicated Account Manager
- Full range of Legal Enforcement Powers
If you are having problems with Unpaid Invoices for your Business, it will pay to speak to Experts. Since 2005 we have recovered millions in unpaid invoices on behalf of our clients. For a friendly chat in confidence regarding your requirements, contact us today.