How Far Would You Push To Claim An Unpaid Invoice?

[Gemma Rowlands]

After reading a thread on here yesterday, I have been thinking more and more about the number of clients who up and run without paying the invoices that I have sent to them. Although the majority of projects that I do are worth less than £200, if I take the time to add up the amount that I have lost since starting, I imagine it would shock me into action.

But how do you chase your unpaid invoices? What is the lowest amount you would bother for? How long do you usually give your clients to pay? I have only just started adding a date to the bottom of my invoices with regards to when I expect payment, and the date that I give is to pay within 14 days. Most pay within hours rather than days so it isn't a problem a lot of the time - but there are still those occasions where it is a bit of an issue!

 

[Liz @ Human Nature]

Gemma, I think (having run accounts payable with my last business, and worked for another business alongside the person who handled accounts payable),that it's not uncommon to wait to pay an invoice until it's chased. Sometimes more than once. If cash flow is tight, then you may want to push it right up to the last minute.

I also know from experience that the people who got paid first were usually the ones who reliably chased me for payment if it was overdue. Now, just to say, I was actually a really good payer (and was told that by many of my suppliers),but I would sometimes stretch things if I could get away with it and needed to avoid going overdrawn etc. But I could usually predict, to the day, certain suppliers calling me with a friendly reminder. Others would let it slide, and not surprisingly, they usually got paid last.

So my advice would be always to chase, in a friendly way, as soon as they are overdue even if it's only £20. Be really reliable about it. If you have regular customers they'll get used to it and probably get used to paying you first. If you've supplied goods or services, they should be paid for.

And if it's a regular problem, ask for payment up front, at least for the first set of work you do for them!

 

[Gemma Rowlands]

Liz I'm actually quite shocked (although I probably shouldn't be) that invoices aren't just paid when they're sent! I always pay mine within hours or I feel guilty about it! I suppose it makes sense to keep hold of cash as long as possible, though.

I often ask for some payment upfront, but because we're a tiny business people tend to be uncomfortable about it. I do have some regular customers who pay me in advance though, and they certainly help to even out those who push it to the limit! I have a great relationship with longstanding clients and there are a few who pay me as soon as the invoice is emailed to them, which is great!

I definitely, definitely need to get a proper plan in place rather than the plan just being "wait for people to pay".

 

[Branded Merchandise]

It's a tricky one because I'm always conscious about appearing rude. However some people will leave it to the last minute, for whatever reason. So they do need a gentle reminder. We usually ask for payment in advance for the first order. After this, we're more comfortable about giving them 28 days to pay etc.

 

[Gemma Rowlands]

It's a tricky one because I'm always conscious about appearing rude. However some people will leave it to the last minute, for whatever reason. So they do need a gentle reminder. We usually ask for payment in advance for the first order. After this, we're more comfortable about giving them 28 days to pay etc.

I'm ridiculously bad at chasing money.. I'm always like "TERRIBLY sorry to bother you.. I'm so sorry.. really sorry.. but it might have slipped your mind to pay my invoice.. I know you're busy.." haha it's a good job I'm not in charge of a huge business because there's no way I'd be able to manage it!

 

[Branded Merchandise]

Haha! I know what you mean. I've tried the old:

'I have some great new products that you might be interested in. I've got this and this (have you paid the invoice yet?) and this and this?'

Doesn't work that well!

 

[Gemma Rowlands]

Haha! I know what you mean. I've tried the old:

'I have some great new products that you might be interested in. I've got this and this (have you paid the invoice yet?) and this and this?'

Doesn't work that well!

Haha - hiding the message in between niceties . I need to toughen up!

 

[saltire]

Why would you ever apologise for chasing money that belongs to you? If people are genunely happy with the service or products you provide there should be no issue with paying you on time.

Unless your a bank or a registered charity there is no excuse.

Being persistent is probably the key thing to making sure things get paid on time. I've lost count of the number of businesses I've seen fail because they were afriad to ask for their money.

If a customer takes umbridge to you asking to be paid then they're not a good customer and eventually they wont pay you.

Like I said unless your a bank people shouldn't be using you to fund their business.

Apologies if this comes across as quite direct but it's an area that I really feel strongly about.

 

[Gemma Rowlands]

Why would you ever apologise for chasing money that belongs to you? If people are genunely happy with the service or products you provide there should be no issue with paying you on time.

Unless your a bank or a registered charity there is no excuse.

Being persistent is probably the key thing to making sure things get paid on time. I've lost count of the number of businesses I've seen fail because they were afriad to ask for their money.

If a customer takes umbridge to you asking to be paid then they're not a good customer and eventually they wont pay you.

Like I said unless your a bank people shouldn't be using you to fund their business.

Apologies if this comes across as quite direct but it's an area that I really feel strongly about.

I don't know - I guess I worry about being too pushy, because they may have full intentions to pay on a certain date, and if I ask for it over and over they might get annoyed and go elsewhere next time!

I'm only relatively new at the whole "being in charge" thing so it hasn't been something that I've had to deal with before, and as I say the majority of clients are absolutely fine so it's only one or two that I have issues with.

 

[Pete Brindle]

I ask for payment in advance for this reason.. because people just seem to 'forget' too often otherwise. I run a music school and my students buy lessons in blocks of 10 (with the exception of one or two taster lessons at the beginning). That way, if ever they don't turn up for a lesson without 24 hours notice we're not out of pocket.

 

[Gemma Rowlands]

I ask for payment in advance for this reason.. because people just seem to 'forget' too often otherwise. I run a music school and my students buy lessons in blocks of 10 (with the exception of one or two taster lessons at the beginning). That way, if ever they don't turn up for a lesson without 24 hours notice we're not out of pocket.

Yeah I usually ask for money in advance for the first project but afterwards for subsequent ones. Perhaps I should just start asking for upfront payment, it would be safer at least.

 

[Pete Brindle]

Yeah I usually ask for money in advance for the first project but afterwards for subsequent ones. Perhaps I should just start asking for upfront payment, it would be safer at least.

I would recommend it. I know I am in a slightly different business to you anyway, though. Some of my clients are children and you know how forgetful they are, so it makes sense for us to ask for payment in advance rather than have them bring it at the beginning of each lesson.

 

[Gemma Rowlands]

I would recommend it. I know I am in a slightly different business to you anyway, though. Some of my clients are children and you know how forgetful they are, so it makes sense for us to ask for payment in advance rather than have them bring it at the beginning of each lesson.

True. Out of interest, what would you do if they were late paying? Would you refuse to give a lesson that week?

 

[Pete Brindle]

True. Out of interest, what would you do if they were late paying? Would you refuse to give a lesson that week?

I would give ONE lesson, because cheques are supposed to be given to me on the first lesson of each block (I do three blocks of ten every year which coincide with school terms. I do this with my adults learners too because it gives me chance to take time off regularly as I work very long hours during the day). Then I would make it clear that payment must be made the week after - I would probably email parents at this point.

 

[Gemma Rowlands]

I would give ONE lesson, because cheques are supposed to be given to me on the first lesson of each block (I do three blocks of ten every year which coincide with school terms. I do this with my adults learners too because it gives me chance to take time off regularly as I work very long hours during the day). Then I would make it clear that payment must be made the week after - I would probably email parents at this point.

Okay fair enough. That time off sounds brilliant, by the way!

 

[Pete Brindle]

Okay fair enough. That time off sounds brilliant, by the way!

It is good as it means that I'm able to get away on holiday with my family - my wife is a school teacher so we both have the same holidays as the kids. And she works in the school they attend so childcare is literally never an issue! But I actually get bored quite easily and always have to be working, so I sometimes book in private lessons during the holidays, which the adult learners in particular enjoy.

 

[Okdar]

It's a tricky one because I'm always conscious about appearing rude.

 

[Jason Howsam]

It's a tricky one because I'm always conscious about appearing rude.

Asking clients to pay invoices for services or products that you have provided in good faith is definitely not rude. All businesses need to be paid to enable them to function and hopefully grow especially if you are an SME. I have more than 20 years of experience in Credit Control and can advise that a large % of businesses will only pay once they have been reminded!

 

[hubmag12]

It is often challenging to navigate situations and appreciate the importance of maintaining a healthy cash flow to ensure the smooth running of operations. Here are some valuable tips to help you expedite the recovery of your money:

1. Follow Up Persistently: If a payment becomes overdue, don't hesitate to follow up with your client. Initiate polite and professional reminders, stressing the importance of timely payment and the impact it has on your business operations. Maintain a persistent yet respectful approach until the issue is resolved and payment is received.

2. Seek Professional Assistance if Needed: In some cases, despite your best efforts, you may encounter persistent non-payment or difficulties in recovering your money. If the situation becomes untenable, consider seeking professional help, such as engaging a collections agency or consulting with a legal expert specializing in debt recovery. These professionals can provide guidance and support in pursuing the resolution of outstanding payments.

3. Establish a Clear Time Agreement: To mitigate payment-related issues or challenges, it is crucial to have a well-defined time agreement with your clients. This agreement will serve as a reference document, enabling you to address any problems that may arise. By setting clear expectations from the beginning, both parties can avoid misunderstandings and facilitate prompt payment.

4. Communicate Proactively: Establishing open and proactive communication channels with your clients can significantly contribute to prompt payment. Regularly remind your clients of upcoming payment due dates, providing them with clear instructions on how to remit payment. Additionally, promptly address any concerns or questions they may have, fostering a positive working relationship and encouraging timely payments.

5. Consider Automated Systems: Utilizing automated invoicing and payment tracking systems can streamline the payment process and minimize delays. These tools can help you send timely reminders, track outstanding invoices, and facilitate online payment options, enhancing efficiency and reducing the chances of late payments.

6. Opt for Shortened Payment Terms: One of the most effective ways to safeguard yourself against overdue payments is to use shortened payment terms. Instead of extended payment windows, consider specifying a shorter timeframe for receiving payments. This approach encourages clients to settle their dues in a more timely manner, reducing the risk of payment delays.

7. Implement Late Payment Fees: It is highly recommended to include provisions for late payment fees in your invoicing process. If a client exceeds the agreed-upon payment date, these charges act as a deterrent and incentivize timely payment. Clearly communicate these fees in your payment terms and ensure they align with legal requirements and industry standards.

 

[The Resolver]

Gemma, for higher value sales, escrow is the way to go. This is where the customer pays the monies in advance to a third party who retains the monies until the customer has confirmed that the service has been carried out satisfactorily whereupon the monies are paid over to the contractor. Of course the key is to include a process to deal with disputes usually a form of informal mediation following by arbitration.Of course the fees involved only make this worthwhile for higher value transactions. The challenge is to design such a service for very low transactions such as in your own business..

I am involved in the use of technology as an aid to resolving disputes and am going to reach out to collegues in the field to share some thoughts and ideas. It would have to involve automated negotiation when there is a genuine dispute and automatic payment over to the contractor after a period of time in which the customer has failed to take certain steps such as providing evidence for non-payment. As someone selling a service for under £200 it would help if I could have your thoughts on some ideas when developed further. If this is of interest perhaps you could email me at g.ross@TheResolver.com . I will post more information on here once a firm process has emerged.