Expert Guide for Unpaid Invoice CollectionLast modified: October 20, 2022
Expert Guide for Unpaid Invoice Collection
As a small business owner or a self-employed individual, you require your invoices to be paid on time and in full. After all, time is money and you deserve to be paid for the time you spend working hard for your customers.
In an ideal world, the goods and services that you provide to your customers would be paid for upfront, leaving payment terms obsolete. Sometimes, the process of sending an invoice to a customer and them paying it is not as simple as it should be.
Imagine you have just had someone carry out work for you and they have just presented you with the invoice. Instead of paying the invoice, you choose to ignore this and leave the business without the funds they rightfully are owed.
It may be uncomfortable to think of ever doing something like this, however, there are times when this happens. For some businesses, this happens on a far more regular basis and results in the damaging of cash flow.
It has been reported that since 2020, UK SMEs have been chasing a combined £50bn in late payments.
This is a shocking statistic and highlights a clear need for businesses to know how to recover unpaid invoices.
Some of the most common excuses for late payment of invoices are:
- “We forgot about the invoice date.”
- “Our accounts team is out of the office.”
- “We have already paid the invoice.”
- “There is an error on the invoice that needs changing before we can pay.”
Although it is perfectly normal for invoices to become overdue every once in a while, when this happens regularly, you need to take action. Of course, there are many things that you can do that will speed up the collecting process for owed money.
We have created this expert guide for unpaid invoice collection to help outline the steps you can take to make sure your debtor pays.
How to Prevent Unpaid Invoice Collection
Dealing with unpaid invoice collection can be a time-consuming and resource-heavy task.
This is especially true if you are already responsible for the day-to-day running of your small business.
The sad reality is that, realistically, this has to be rectified, leaving you no choice but to undertake this task.
To negate the effects this can have on your business, preventative measures can be taken to reduce this.
After all, as the famous saying goes “prevention is better than a cure”.
It is best to have an effective credit control system that monitors when invoices are to be sent out and then paid.
Whilst this is the case, we understand this may not be an option for smaller businesses.
Following the below steps will help to deter customers from leaving your invoices unpaid.
Ensure all invoice information is correct
This should be self-explanatory, however, you should check your invoices before you send them.
Invoices are important documents that result in you getting paid and as such, every piece of information needs to be accurate.
Some examples of information that needs to be correct are names, addresses, costs, order numbers etc.
Failure to do this may give the debtor more reason to withhold payment for the invoice.
Outline terms and conditions early on
Discussing terms and conditions with a customer early on sets out what their obligations are.
For example, they should detail payment terms, late payment terms, due dates and timescales for the payment.
These should be reviewed, agreed and then signed by your customer, giving you a binding document.
Better yet, if you can get the customer to pay upfront then this will erase any issues related to unpaid invoices.
Discuss late payment consequences
You may wish to consider adding consequences for any payments that turn from outstanding to overdue.
Examples of this could be that you may claim interest on the payment, or initiate legal action or court proceedings through the county court.
Naturally, this should deter the debtor from choosing not to pay your business for the work they have received.
If they are still determined to leave your business invoices unpaid after knowing the consequences, further action should be instigated.
Debt Collection for Unpaid Invoices – Frontline Collections
If the above steps have failed to stop your invoices from going unpaid by delinquent customers, you need a better solution.
The most effective way for small businesses or self-employed individuals to get their money back is to use a specialist debt collection service.
The private debt recovery experts at Frontline Collections have had experience in unpaid invoice collection since 2005.
We help individuals by delivering a service with unrivalled success rates that is cost-effective.
Should you need help with unpaid invoice collection, contact our friendly specialists today.
Frequently Asked Questions About Unpaid Invoice Collection
I have an unpaid invoice, how can I recover this?
To recover the money you are owed, you should use a debt collection agency that specialises in unpaid invoice collection.
A customer is making excuses for late payment, what should I do?
Whilst every late payment excuse must be taken with a pinch of salt, it is important to investigate these quickly.
Can unpaid invoice collection be carried out for businesses AND individuals?
We specialise in recovering money for individuals, however, other firms can undertake business debt collection for the late payment of commercial debts.
Should I use a debt collection agency to recover unpaid invoices?
A debt collection agency, such as Frontline Collections, will provide you with the highest chance of success at the lowest cost.
What if the person who owes the money is based overseas?
Regardless of location, whether local or international, we can recover debts thanks to our global network of collectors.