Unpaid invoices are very much a ‘silent menace’ in the business world. Just ask any freelancer or CEO and they will mention a time when their demands for payment went unanswered. These people also know this situation isn’t just a minor inconvenience.
This can seriously impact cash flow and even put your business at risk. Fortunately, there are ways to get your invoices settled without ruining relations with your clients or suppliers.
Just how big a problem are unpaid invoices?
In 2017, it was reported that more than 70% of invoices in the United States were paid late. Although its hard to clearly identify how this affects American businesses, the problem is better documented in the UK.
There, the issue is believed to cost UK firms about £250bn every year. This is just in terms of the actual money. It’s impossible to fully determine the costs of employers chasing organizations for what rightly belongs to them.
Furthermore, not getting paid at the scheduled time hinders business growth and may stop companies from paying their obligations on time.
How can I get my unpaid invoices settled?
The reasons for missing an invoice date are numerous. Perhaps it could be something as innocent as forgetting to make a payment or misplacing your payment details. Alternatively, it’s common for firms to not pay an invoice and argue over the details in the hopes chasing them would be just too much hassle.
Regardless of the reasons, not getting paid can still hurt your bottom line. Here’s what you can do about it:
The chasing method
Getting an unpaid invoice resolved requires chasing. Once the payment deadline has passed, with no luck, send a reminder email to the business. If this doesn’t get any results after 24 hours, send an email to — or phone — that organisation’s accounts department.
This should resolve the matter but — if after another 24 hours — you don’t receive an update, send an email to both parties notifying them about the unpaid invoice. Inform them you’ll be adding a late fee to the debt as well as charging interest on what’s owed if the invoice is not resolved in one week.
Getting serious
If this method doesn’t get your invoices resolved, then it may be time to go through a debt collection agency or seek legal advice to reclaim what’s yours.
Although you may wonder whether it makes business sense to put lawyers onto your clients, it’s worth considering whether these organizations will help or hinder your business. A client who regularly pays late will not help you — they’re a liability.
If the firm you’ve chosen to do business with is as professional as you though, they’ll understand the importance of getting late invoices resolved.
I’m drowning in debt from unpaid invoices, what can I do?
If you’re drowning in debt caused by unpaid invoices, you could potentially use a lawyer to reclaim what’s yours. If this is causing you to have problems with your personal debts then one possible solution might include an IVA or debt consolidation loan to keep your creditors at bay.
This is a situation which is very easy to get into but, hopefully, using some of the methods described above, you can reclaim control of your finances.
