How You Can Write An Unpaid Invoice Letter That Works
How You Can Write An Unpaid Invoice Letter That Works
Chasing for payment is something that sometimes feels uncomfortable for many business owners across the UK. This is especially true for younger and smaller businesses. Or, in other cases, where chasing for payment can take precious time away from another task.
Awkwardness aside, it is absolutely critical that you receive payment when an invoice is due. Without this, the success of your business is uncertain, as too many invoices that become overdue (and unpaid) can spell disaster.
Chasing for payment is a normal part of daily business life. With most companies constantly experiencing a high level of business activity, mistakes are bound to happen. Missed payments are common, and so it’s the job of credit controllers to ensure that everything runs smoothly.
Unfortunately, it is also common for clients to deliberately withhold a payment. Some debtors will go to the end of the Earth to avoid making a payment. If this is the case, you should write a strong unpaid invoice letter. Doing this before taking action via a debt collection agency can be a step in the right direction.
Whenever an invoice is overdue, it can represent a big problem for a business and its cash flow. By taking the right steps, you can enjoy the growth and success your company deserves.
10 Steps You Should Take When Writing an Unpaid Invoice Letter
Sending your unpaid invoice letter at the right time can be an important part of the process.
For instance, having a letter arrive on a busy Monday morning might not be the best time. Your debtor will be busy with other letters, and yours may get lost in the flow.
This is especially important for newer clients, or those that have got a history of overdue payments.
Always send your first letter the day after the invoice due date. After this, you should send further follow-ups 30, 60 and 90 days overdue from the original date.
Aim to actually post your letter the day before you want it to arrive. Tuesdays and Thursdays are good days, as your debtor probably won’t receive as much post as they would do over the weekend.
2. Use professional language
You should always maintain a professional one in your correspondence with clients, regardless of the matter you are discussing.
When sending an unpaid invoice letter, you should also speak clearly and state your point firmly.
Your letter should be right to the point and be as helpful as possible under the circumstances.
Even though it is frustrating to have a payment withheld, you should never let this be reflected in your communications.
3. Be polite
As well as being professional, you should also be polite. In many cases, there might be an innocent explanation for why the debt has not been paid. A friendly reminder can go a long way to smooth out any issues.
Going in too strongly if this is the case could alienate the client. This puts future opportunities at risk and could hurt your business in the long run.
Making sure that you are polite leaves little room for a debtor who is deliberately withholding payments.
4. Include the original payment details and invoice
Including all the information related to your debt can help your client to make a payment.
Making sure that you include all of the related documents can provide a client with the information they might have missed or lost.
You should include the original invoice if possible, or the invoice number and when it was issued if not. You can also include your payment terms, and any additional reminders you might have sent.
As well as this, you should also add in your contact information as well as clear instructions on how they can pay you.
5. Introduce late payment charges
Late payment charges are a good way to help to make sure your clients send payment on time.
Businesses in the UK can use this guide to calculate how much interest they can charge.
Doing this is a good way to incentivise payments and crack down on late payers.
It is important to note that you must make it clear that late payment charges may be incurred at the beginning of any agreement. If you don’t it may compromise an otherwise good working relationship.
6. Implement clear payment terms
As well as late payment charges, setting up clear payment terms at the onset of any new agreement can help to reduce non-payment.
Payment terms are a good way of advising and informing a client of their obligations before you commit to doing business with them. It also educates them on any potential consequences there might be if payment is not made at any point.
You should always make payment terms clear, and ensure that your client agrees to them before moving forward.
If they don’t agree, it may be advisable to end the relationship. It is often a sign that there would have been payment issues further down the line.
7. Automate your payment reminders
Most business invoicing software has the ability to automate payment reminders.
This is a good option, as it helps you to save the time you would spend doing this yourself.
8. Offer a part payment or a payment schedule
In many cases, it is a good idea to propose that a payment schedule or a part payment be made instead of the full amount.
Sometimes the client won’t pay the full amount no matter what the consequences are. Paying smaller, monthly charges are often more palatable for them.
Doing this is not ideal, as it will take longer to get your money back. However, eventually, the client will pay the full amount.
9. Make sure that the letter can be tracked and traced
Whenever you send an unpaid invoice letter, or any other communication to request payment, you should always make sure it can be traced.
Often, debtors will claim that they never received your letters. This is a delaying tactic and without proof of receipt, you cannot confirm this.
With a tracked delivery, you will be able to prove that your client has indeed received your letters.
10. Speak to a Debt Collection Agency for more help
Despite the best efforts of extremely professional people in businesses across the UK, clients will still miss payments.
In many cases, this is deliberate and must be handled by a professional debt collector.
Continuing to chase a debt from a non-paying client becomes less and less cost-effective as the case gets older.
Speaking to a debt collection agency can help to recover your money as soon as possible. This is as well as enabling you to spend your time on tasks that help to grow your business.
Federal Management has helped businesses across the UK to recover money that is owed to them. If you need help with an unpaid invoice letter, or if the ones you have sent have not worked, speak to us now.
How You Can Write An Unpaid Invoice Letter That Works – Frequently Asked Questions
When is the best time to send an unpaid invoice letter?
You should send an unpaid invoice letter the day after your client’s payment is overdue. After this, you should send additional letters 30 and 60 days after the payment due date.
What should I do if my client ignores my payment reminders?
If your letters are being ignored, you should contact a debt collection agency as soon as possible. For more information, speak to Federal Management now.
Should I add late payment charges to my invoices?
Adding late payment charges are a good way of making sure clients pay on time. If you are regularly experiencing issues with late payments, implementing charges may be a good measure. You should always notify clients of this decision before making them active.
Can’t I just make a phone call instead of sending a letter?
Making a phone call is a good way of chasing payment. However, you must always make sure to record the conversation if you do so. As well as this, sending a letter is less time consuming than making a call, where a client could take a lot of your time.
What should I do if my client is in another country?
Unpaid invoice letters can still be sent to clients in another country, but you should confirm that recorded delivery is still an option. If your client in another country is refusing to pay, speak to Federal Management now.