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What your Business can do About an Outstanding Payment

What your Business can do About an Outstanding Payment

What your Business can do About an Outstanding Payment

What is the difference between an outstanding invoice and an overdue payment?

Put simply, outstanding payment is money that is owed to your business that is not due yet. Making sure that these are paid is a good way to make sure that no cash flow issues ever occur.

Overdue payment is money that has passed its due date and not been paid. If your business has a lot of these, it can put it at risk. If you notice a pattern of overdue payments, it may suggest that you need to take stronger credit control and debt collection action.

Keeping an eye on both types of payment is an important part of daily business life. If a client is rapidly approaching the date where the payment is due and it’s still outstanding, you must act right away.

Waiting for an outstanding payment to become overdue is not the best course of action. With some work, you can ensure that your invoices are paid on time.

Every business owner wants to avoid issues with receiving payments for the goods and services they provide. In a perfect world, all invoices would be paid for in advance of their payment date.

With some preparation, you can help to ensure your company minimises overdue payments.

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Outstanding Payment – Learning When to Act

Most clients pay on or before their due date, but occasionally there are also a few that leave it to the last moment or even pay late.

These “bad payers” are a constant headache for accounts teams and business owners alike.

Your company needs a stable and steady cash flow so that you can continue normal business operations. Having one worried eye on your invoice software every month is not a good way to work. This puts a lot of stress on everyone and can lead to more issues if it’s not carefully managed.

Getting ahead of the bad payers is a good step towards financial security. Spotting the warning signs of a client who isn’t going to pay is one of the best skills to master.

If you have clients that always have issues when it comes to making a payment, some proactive management can help. If you have one or a number of clients that have not paid, it is often best to contact Federal Management for assistance.

Managing Outstanding Payments – Payment Terms

The best way to prevent issues resulting from an outstanding payment is to set up robust and clear payment terms.

Payment terms should always be made clear to a client before you begin any work for them. It should always clearly state their payment obligations, such as amounts and due dates. You should also make them aware of any consequences or penalties should payment not be made as stated.

This is the best situation for everyone involved. You will set an expectation where you get paid on time, and your client is aware of any issues (and charges) that they might incur if they pay late.

Including Late Payment Charges

Making sure an invoice does not change from an outstanding payment to an overdue one is important.

One common way of doing this is to implement a late payment charge onto your invoices.

Before doing so, you should make the due date as clear as possible on your invoices. You should also inform your clients that this may be a measure you will take on all overdue payments.

This is a very good way to give a client a reason to pay on or ahead of time, and can go a long way to help your cash flow.

Whilst this may seem like a strong action to take, it is one that business owners must embrace. Without a reason, a client might have few reasons to pay on time.

The UK government has published a guide on late payment interest, which is useful when implementing them into your credit control process.

Resolving an Outstanding Payment

Sending Payment Reminders

Many clients are just as busy as your business, and emails and letters can always be lost in the flow of a company’s daily activities.

This is true of any business, both large and small, and sending a reminder is a good way to help your invoice rise to the top of the pile.

Many business owners may be hesitant to send a reminder, as they might not want it to be perceived as them badgering for payment. However, it is important to remember that doing this is entirely fair.

You should always be paid for the services which you have provided, and sending a reminder to a client is completely normal.

Plan your reminders out carefully and always schedule them in advance. Sending a friendly prompt may help your client to pay on time.

Instructing a Debt Collection Agency if an Outstanding Payment Becomes Overdue

Even with the best-laid plans, there will always be those payers that simply ignore your credit control process.

Many debtors will deliberately lead your credit control team on a wild goose chase, giving you excuse after excuse and never paying what they owe.

It is important to recognise when a client is doing this. Making sure that you don’t spend too long chasing a debtor is important, as you will only waste your time and money.

A debt collection agency like Federal Management is the best solution to any case relating to outstanding or overdue payments. Unlike other options, they provide a cost-effective and reliable service.

Federal Management has recovered millions of pounds in debt since we opened in 2004. Speak to one of our friendly debt collection experts now for more information on how we can help you.

What your Business can do About an Outstanding Payment | Get immediate help from our Experts

If you need help with the Recovery of Debt, our friendly team of Debt Collection Experts is happy to help you today,

SPEAK TO A DEBT COLLECTION EXPERT

What your Business can do About an Outstanding Payment – Frequently Asked Questions

What is an outstanding payment?

An outstanding payment is when money is owed but is not due yet. For example, you might have provided work for someone and issued an invoice. The payment date is 30 days from now. In this case, the amount is outstanding but not overdue yet.

How can I prevent payments from becoming overdue?

There are several key steps you can implement to ensure that outstanding payments don’t become overdue. These include late payment charges, comprehensive payment terms and sending payment reminders.

What happens if my client doesn’t pay?

If a client doesn’t pay despite your best efforts, contact a professional debt collection agency like Federal Management right away. This will prevent you from spending time and money that you don’t need to through chasing the debt alone.

How can I work out late payment charges?

The UK government has a website that contains information on a standard late payment of commercial payments.

When should I send a payment reminder?

You should send a payment reminder at a set time between issuing the invoice and its due date. A good date to do so is 14 days after the invoice has been issued. You should also use this opportunity to confirm that the invoice has been received, as well as answer any questions the client might have at that point.