Shweta Jhajharia, founder of The London Coaching Group, explains how business owners can make sure their unpaid invoices are settled within 28 days.
Are you owed money on an unpaid invoice? Have you given up hope of ever getting the money?
Chasing up invoices is probably one of the most tiresome, time-consuming and immensely frustrating parts of running a business.
So, here is a straight forward four-week plan to help you get those unpaid invoices cleared and the money in your bank. Stick to the process and it will reduce the stress and time it takes to get paid – and hopefully eliminate the need to write off invoices in the future.
An invoice that is one week late could be due to a genuine oversight by the client, so it is important to just give a gentle nudge at this stage. The majority of clients will appreciate the reminder, and pay it immediately.
A friendly yet firm email is sufficient, informing the client that their payment is now overdue, and asking them to arrange payment as soon as possible.
Three things London tech businesses need to understand about Brexit
If they have not paid at this stage, they have either not seen your email, or have decided to ignore it.
The best thing to do is call the client (this can be done by a junior member of staff, as it is not yet an urgent matter) and ask them why the invoice has not been paid. Offer to help them with any issues that they might be experiencing.
If the invoice has still not been paid, then the issue should be passed to a senior member of staff. The client may be disputing the invoice, or might simply need a more forceful push to encourage them to pay the debt.
You should send the client another email advising them that the matter will be escalated if the invoice is not paid within a week, and that they can get in touch if they have any issues.
New tax and registration service for startups
A senior member of staff should call the client directly if the invoice has not been paid by week four, providing the client has not contacted you to discuss any payment difficulties.
If they have contacted you, then depending on the situation you might decide to offer the client an extended deadline, or set up some sort of payment plan.
The senior staff member should make it clear that the matter is now serious and that, if the invoice remains unpaid, legal action will be taken.
By this stage most clients will have paid. However, occasionally you may need to take things further with legal action, or even decide to write off an invoice if you really think there is no chance of being paid.
Implementing this simple four-week follow-up process, or investing in business consultancy services to help you introduce the system, will mean that your business can streamline its approach to unpaid invoices. When we have seen our clients introduce this system, it has invariably saved them time, money and stress.