Do you have some clients who always delay your payments? Are unpaid invoices affecting your cash flow? Is your client always busy or comes up with an excuse when you ask about the payment? Well, these are some of the commonly faced problems by small businesses. An untimely or worse unpaid invoice not only affects the profitability of your organization but also causes other problems in your finances. So how do you deal with overdue invoices? Here’s what you should do to overcome the problem of overdue invoices.
Warn About Late Payments
This is a precautionary step. When you deal with your client, it is important that they realize the implication of late payments. This can be in the form of charging an interest for the overdue amount. Charging an interest is usually best for a client who often delays the payments. If it is a client that regularly pays you on time but misses out on the payment once in a while, then you should give the client some leverage and not charge the interest. Instead, inform the client through calls or emails about the outstanding payment. It is important to realize that you do not lose out on a client for not making the payments on time for the first time. Late payments interest is best suited for clients who delay the payment often.
If you find out that the clients often delays the payment you can offer them rebates if they pay on time or much before the due date. The main aim is to get the money flowing into your business and avoid bad debts. So instead of chasing after clients for payment, it’s best that you give them some discount for paying early. However, care should be taken that you do not make it a habit of offering rebates to get payments on time. Moreover, you should consider offering rebates only if the amount due is large.
Hire the Services of a Professional Accountant
Are you caught up in dealing with unpaid invoices? One of the ways to keep you away from the collection process and focus on other important task is to hire the services of a professional bookkeeping and accounting company. Give the responsibility of collecting the amount that is due to your accounting partner. The accounting partner will ensure that they chase behind these clients in a professional manner and that you are able to get your payments on time.
Send Constant Reminders
If your client is very adamant on not paying for your invoices even after the due date, then you should start by sending constant reminders. You may consider sending an email or calling the client every day to ask about the payment. However, be careful that you do not lose your cool and ask the client in a friendly manner about the payment. If you don’t want to run after clients on long calls, then use the accounting software. The accounting software is able to generate automatic reminder emails that are sent at regular intervals until you receive the invoice in full payment.
Consider the nature of clients and decide whether you want to offer any credit to a particular client. Accepting credit cards from your customers or clients is another option in case the client does not have money at present. Collecting payments from unpaid invoices is a tedious job and in the process, you may get frustrated running after the clients. Therefore, it is recommended that you take help of a professional accounting service firm who look after the collection process and ensure that you do not miss out on any payments from your clients.