Unpaid invoices: how to get them paid

Alan in Unpaid invoices | No Comments

Unpaid invoices are a problem for many businesses. With banks less willing to help businesses with, lending or , reducing or removing overdrafts, businesses are using the suppliers to fund them by way of unpaid invoices.

Having a successful business with clients with whom you have a long working relationship does not preclude you from unpaid invoices. Those long standing clients may have financial problems of their own and are often are left with no alternative but to dump their burden on you.

This tale is typical of many businesses both large and small where they appear to be healthy and growing in terms of sales but that growth is being sabotaged by slow paying customers and unpaid invoices.

So what do you do to prevent being strangled by cash flow problems and unpaid invoices?

By implementing these simple practices you can help make those unpaid invoices in most cases a thing of the past.

1. Confirm client relationships in writing
First of all you need to get your ongoing relationship with your client in writing. This will protect you should you have a dispute at a later point. You need to do this at the beginning of the relationship when everybody is on good terms. Ensure they get a copy of your terms and conditions with the order confirmation or quotation. Make you’re your T&C’s are up to date and include payment terms and any interest that you can apply for late payment. If at any time you want update your T&C’s email a copy to all clients explaining that they have been updated and this latest version is the one you will be using on all new business. In our experience nobody reads these but if you have established the basis on which you will conduct business and more particularly payment terms - this will strengthen your case when chasing unpaid invoices.

2. Quote payment terms
Quote payment terms on all quotations and tenders and state that the quotation is subject to your terms and conditions which if possible should be printed on reverse. Your client needs your terms of business when you quote or accept the order. It is too late to just print them on the back of your invoice.

3. Get the name of the person responsible for raising payment
Find out the name of the person responsible for raising payment, they are your point of contact for payment – not the person who gives you the order. This is this person who will help your cash flow.

4. Keep a payment record sheet
When you contact a customer for payment, keep a record of the conversation I recommend a simple payment record sheet. Note what is said and be specific about agreeing future actions and, if appropriate, confirm this by email

5. Keep track of payment promises
If a promise of payment is made, ensure you diary forward to call them the day after payment is due, if it doesn’t arrive or to thank them if has. The people in accounts spend their lives fending off people chasing for money so a simple thank you will go down well and they may well remember you next time your unpaid invoice is due for payment.

6. Don’t let up on payment chasing
Never let chasing slide – be persistent – it is your cash flow that is suffering from unpaid invoices.

7. Don’t be too lenient
The more lenient you are and the more you let payment slide the more your customers will assume you don’t mind waiting and that you are prepared to give them extended credit.

8. Is factoring right for you?
Think long and hard before you resort to factoring. You probably won’t need it if you get your unpaid invoices paid - so keeping your cash flow on track – why fund your customers?

9. Understand the time and costs involved in outstanding invoice collection
Be realistic about what it costs you in both time and money to collect your outstanding invoices. Cash flow is essential for your survival you want to eradicate unpaid invoices.

10. Get Cashflow Protector
If you don’t like chasing money and your time is more profitably spent running your business why not consider outsourcing to Cashflow Protector® the specialists who will retain your customer goodwill, get you paid and keep your cash flow on track.

Make unpaid invoices a thing of the past - after all it is your money slow payers are using to fund their businesses!
Call Alan Smith at Cashflow Protector for a free consultation and advice on cash flow issues. Telephone 020 8536 4138 or email him at alan.smith@cashewgroup.com.