Adding Interest On Unpaid Invoices – Does It Work?
Adding Interest On Unpaid Invoices – Does It Work?
A persistent issue for self-employed, freelance or independent professionals is the challenge of clients who do not pay for goods or services completed. To many, adding interest on unpaid invoices seems like a good option, as the perception is that this may prompt the client to pay quicker. However, this is not necessarily a guaranteed outcome, and often attempting to collect on a debt resulting from an unpaid invoice can take an inordinate amount of time and resources.
If you find yourself with invoices that are unpaid, you are not alone in this – research shows that over the last year there has been a 23% increase in unpaid invoices to SME’s. We have dealt with thousands of clients over our long history who are self-employed and haven’t been paid, this is, unfortunately, a very common problem.
Cash flow, especially in the challenging economic climate we find ourselves in, is a very important subject for all types of professionals, especially those who are self-employed.
Growing a business should never be overshadowed by the process of recovering money that is owed to you. This article should be particularly valuable if you have already tried to recover an unpaid invoice yourself and have struggled to produce a result after multiple attempts.
Naturally, it is extremely common for those who are owed money to try and recover the amount themselves. A common tactic which is used by many is the adding of interest on unpaid invoices to compel the debtor to pay.
At Frontline Collections, we understand the reasons for wanting to recover the debt yourself, however, there are many disadvantages to this which could result in unforeseen consequences to yourself and the growth of your business.
Adding Late Payment Charges – Should You Need To Do This?
If you have tried to communicate with your client regarding the late or non-payment of their invoices with no success, you may feel like you are at the point of no return and rightly so.
Using the method of adding interest on unpaid invoices to provoke the client into paying may seem like a good idea when all other steps have been worked through. Whilst this initially sounds promising, there are many disadvantages to you trying to get your unpaid invoices paid on your own.
Recovering unpaid invoices independently without the input of a professional debt collection agency is extremely counter-productive to your business. Take into account the time that it will take you to go through the various chains of communication involved in the debt collection process, which could be better spent on performing value-based actions which will grow your business.
There are no guarantees that you will get your money back which will create many more problems after you have spent so much time and resources on the recovery process. Time is very much money, and spending an inordinate amount of resources and energy on a collection of a debt in-house instead of focusing on growing your business will badly impact any self-employed professional.
One point worth noting is that thorough planning prior to the work being carried out can actually aid with complications arising from unpaid invoices – for more information on this, read our article on Preventing Non-Paying Customers.
The steps which you will have carried out by now to try and recover your money, spending your valuable time and resources on, is what a Private Debt Collection Agency should be doing on your behalf instead. Instructing an agency is often the best course of action, as they are specialists in recovering debts and are the most professional and expedient method.
Why Should You Use A Debt Collection Agency To Recover Your Debt?
However difficult the situation may be when having clients who are not paying you, it should never be an option to have to do collect the debts by yourself. As discussed above, this is extremely counter-productive to the business and can have some serious financial impacts if an unsuccessful outcome is reached.
At Frontline Collections, we are the UK’s No1 for all Private and International Debt Collection Requirements and have over 15+ years of industry experience.
There are many benefits of procuring us to collect your unpaid debts such as:
- Not carrying out the collection process by yourself will mean you are able to grow your new business and continue to produce work for new clients.
- We have the industries best recovery rate at 90% which ensures the highest chance of your debt being recovered (a lot more than if you were to do this yourself).
- It is our speciality to collect money from those who have not paid their suppliers and we have worked across a wide range of sectors in our 15 years in business.
- Using a Debt Collection Agency such as ourselves will cost you a fraction of what it would cost if you were to recover the debt yourself.
- We offer the LOWEST commission rates in the UK which start from as little as 8%.
- The relationship with your client won’t be ruined which will allow future working opportunities.
Our trusted team of industry experts work on a “No Collection – No Collection Costs To Pay” basis, which means that if we are not able to successfully recover the money you are owed then you will pay nothing. We are dedicated to providing the best service for all of our clients and allows us to continue to be the best in the UK for Private Debt Collection requirements.
For Private, Bulk and International Debt Collection, we have all the tools and assets available, ensuring maximisation of recovery and minimisation of cost. To speak with a member of the trusted debt collection team, please call us on 0333 043 4425.
For Business and Commercial Debt Collection, please visit our award-winning partners Federal Management – https://www.federalmanagement.co.uk/