This guide outlines 5 ways to ensure you can collect the unpaid money owing from invoices to be paid, and keep your finances on track.
Profit ensures that the cash flow of your business is doing good and that you are actually earning more money than you are investing. However, if unpaid invoices disrupt profit and your customer stops paying, it might take a toll on your company. Thus, it is essential to ensure that you get the total amount the consumer owes you.
Wayas to collect on invoices to be paid
Perform Credit Background Check
Before granting credit to your customers, it is essential to understand that the primary policy that you should embody is to protect your assets and to ensure you don’t end up with invoices to be paid. You should establish a process that you can safely follow to ensure that your assets are protected. One thing that you can do to perform a credit check.
A credit check will tell you about the financial track record of a person. It will help you gain insight into their level of responsibility for their financial obligations and present you with their financial state. This is to help you be aware of their capacity to pay you and their ability to pay before the deadline so that when the time comes, you will not have a hard time collecting the money.
Informing The Customer Via Email
There must be a standard protocol you have established that you need to follow in collecting on invoices to be paid. This protocol should ensure a legal and smooth sailing transaction with your customers. However, there may be instances that your customers may have forgotten the due date or problems may have occurred on their part.
Sometimes it would be best to give them the benefit of the doubt. During this time, you can try sending your consumer a message with the email they have provided. Introduce yourself in the email and include the statement of your intent. Add their unpaid invoice and the supposed due date. Remember to be friendly and polite.
Consider Hiring Debt Collection Agencies
Some people will probably ignore you after sending out emails and reaching out to them on social media when they have invoices to be paid. In recovering unpaid invoices as a small business, the best thing you can do is to contact a debt collection agency. They are the type of companies that offer services in collecting and settling unpaid debts of your customers.
Debt collection agencies will do everything within the limits of the law to complete their task. You can be at ease with their collection process. Moreover, if you hire one, you can entirely focus on running your company and let them do the chasing for you.
Also, if the worst things come, the agency ensures that they record all the transactions and communication they make with the debtors. If you bring things to the court, you can present to them that you have tried your best to recover the debt.
Present A Payment Plan
If your customer faces some financial problems and they experience issues with cash flow, which results in their inability to pay in full payment, you can instead present a payment plan for the invoices to be paid. The payment plan can benefit you and the consumer because you are guaranteed to be paid. A payment plan is a contract that you present to your consumer that they will need to pay every month until they clear their balance.
When preparing for the payment plan, meet with your consumer and talk about the amount they can afford every month. Specify the date and the period of the time customers will make the payments. Then, if both of you have agreed, make sure to sign the contract and give them a copy for them to keep. As a result, collecting the payment from them will not be much of a hassle, and you can continue managing your business with no problems.
Call A Lawyer
If the debtor still persistently ignores your call and does not even make any progress with a debt collector, then it would be best to call for a lawyer. However, before you do that, you must also prepare your business and think, “Is this problem worth the litigation?” Try to calculate the possible damages your business might face and whether the customer can sustain it.
To prepare, you need to arrange your evidence. As mentioned before, if you hired a debt collection agency, contact them and ask for the transaction documentation. Collect the records of their attempts to collect the owned invoices, keep the original invoice you have provided, and prove that you have offered them the product or the service.
Keep in mind that you might need to invest some cash for the fees you will face when hiring a lawyer and processing a legal proceeding. That is why you must be aware of this process. Still, bringing the customer’s issue to the court might encourage them to pay their bill. However, if you think that the amount they owe you is not worth it or you could not care more about the issue, you have the option to sell their debt to a debt collection agency instead.
Final thoughts
Dealing with customers like this can be a pain when they are not prompt with invoices to be paid. However, if you continuously ignore people like them and pardon them a lot, it can cause significant damage to your business instead. If you are a small business owner, make sure that protecting your company’s assets is your top priority, and do not just ignore any unpaid invoices.
