How to Collect Unpaid Invoices
If you have a business in which you regularly send out invoices to your customers, you’ve probably had at least one invoice that has become overdue. This can be frustrating and it’s hard to avoid- but you can take steps to make collecting overdue invoices less stressful.
However, before we get into that, you must understand the difference between an invoice that is outstanding versus one that is overdue.
Outstanding vs Overdue
Chances are, you’ve heard the terms “outstanding” and “overdue” used interchangeably when it comes to invoicing. However, they are different.
An outstanding invoice is one that the customer has not paid. An outstanding invoice can be sent out before the payment is due so that the payment can be collected promptly.
An overdue invoice is one that the customer has not paid and is past the due date. When customers fail to pay, it affects your cash flow and increases your risk. Therefore, you must track outstanding payments and get customers to pay on time.
Tips for Collecting Outstanding/Past Due Invoices
If you have customers that frequently convert outstanding payments to overdue payments, here are some tips for collecting these unpaid invoices.
Make sure to set clear terms
The best way to ensure that you collect on unpaid invoices is to be clear with your terms from the beginning. When you send the invoice, make sure that the due date is clearly defined.
If you have customers that are consistently late with their payments, you may want to add a reminder note specifying the payment date in the box for personal messages/additional info.
Send friendly reminders
These days, we’re all bombarded with emails, so if you sent the invoice via email, there’s a good chance that it got lost in the shuffle. If you have an invoice that falls past due, you may want to just go in and click the “remind” button. You may also consider sending them a personal message with a link to their invoice. If a customer is consistently late, you may want to go ahead and set up a few reminders while you are creating the invoice.
Send a physical invoice
While it’s true that digital invoices save on paper, sometimes clients simply don’t respond to emails. Therefore, you may want to consider dropping a copy of their invoice in the mail. Simply print it and send it out.
No matter what, unpaid invoices are not good for a business. However, these tips can help make it a bit easier for you and your business. Contact Masters Commercial Capital Group if you need help with collecting unpaid invoices.