How to Collect on Unpaid Invoices

Having unpaid invoices piling up in your company can be a hassle; not only does it create extra paperwork, but it also means that there are funds in your business that you cannot access because someone else still has them. This can happen at an inconvenient time, such as when you need an upgrade or expansion, when you need to repair or replace equipment or when you have to get the payroll out. Luckily, there are options to get rid of those invoices and get cash quickly when needed. However, the best practice is to take care of the invoices promptly on your own.

The first step to collecting on those invoices is to avoid having a problem with non-paying customers in the first place. Try to do business with clients who have a record of paying on time, and avoid those who are always late. Doing business with customers who don’t pay their invoices not only costs you time and money, but can also make your business look bad when you’re looking for accounts receivable financing. If a client with a sketchy history insists on having you work for them, you can request that they pay in advance or upon delivery of their product or service, and not after the fact.

In the event that you do still end up with unpaid invoices, there should be procedures in place to protect your business. Using a well-written contract before providing the product or service is a good first step. Once the order has been completed, write up an acceptance letter and have the customer sign it. This will avoid any problems later if the client tries to claim they did not receive the order or they were not satisfied with it. Once the work is completed and the paperwork signed, send the paperwork and invoice promptly. Collections are a part of the job that nobody likes to do, but putting it off only makes the situation worse for both you and your customer.

If you have not received payment, be sure to follow up regularly and remind your clients that you need your invoice paid. If it comes down to addressing a dispute the customer may have, be sure to address it professionally and do your best to work with the customer to ensure that their dispute is valid and that you can fix it.

Sometimes, you will need outside help such as a lawyer to collect on your unpaid invoices, however this should only be done after you’ve exhausted all of your other options.

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