Chasing outstanding invoices
Chasing outstanding invoices is a job most people hate doing but for companies, it’s a fundamental part of their business. Especially for SME’s, unpaid invoices can mean the difference between making a profit and filing for bankruptcy.
However, most debtors won’t be aware of this. They will be protecting their own businesses. Generally, they will pay an invoice once they have received a reminder. It’s not that they don’t want to pay necessarily, they just won’t think it’s important to you unless you chase the invoice and send them a reminder.
So, if you don’t chase, they won’t pay. That being said, in our experience, if a debtor doesn’t pay you immediately, it may take more than a reminder to get your money back. But before you turn to a debt collection agency or law firm, there are a few things you can do yourself.
1. Call your debtor to chase outstanding invoices
Sounds simple enough but often this initial step isn’t taken. A phone call reminds your debtor to pay you but also provides a personal connection making them more likely to pay your outstanding invoice. Adding the personal touch can also keep your relationship intact. For example, they may have genuinely forgotten or maybe facing difficulties themselves – this is information they wouldn’t normally share with you over email or through official communication.
2. Send a letter
If you haven’t managed to reach your debtor by telephone or you have, and they still haven’t paid, send a letter. Sending an official letter provides written proof that the invoice is still outstanding and officially requests for the payment to be made. You can also send the letter to other employees within the company, for example, the Finance Director or Managing Director to push your issue further up the line of management.
It is important to note however, that you cannot send a letter in all countries. If you’re unsure, you should check with a lawyer first.
3. Include interests and costs
Calculating the interests and costs that will be applied to the invoice and presenting them can trigger the debtor to pay. Most debtors don’t want to pay more than they have to and will generally settle the outstanding invoice to avoid any extra costs.
4. Set up a payment arrangement
If your debtor wants to pay but is having some financial difficulties or are themselves waiting for a debtor to pay them, then setting up a payment arrangement may be a good solution. Be careful though. Setting up a payment arrangement doesn’t necessarily mean your debtor will pay. It could just simply be a delaying tactic. If you agree a payment arrangement, you should be extra vigilant with the agreed payment amounts and payment dates.
5. Announce legal proceedings
You want to be taken seriously by your debtor and you, of course, want your money back. Announcing legal proceedings is often motivation enough for your debtor to pay but be aware, if you don’t see your threat through, your debtor is even less likely to pay. It is therefore advisable to seek legal counsel first before announcing legal proceedings. Our lawyers can give you advice and provide a realistic expectation of costs and your chances of winning before you begin a potentially lengthy process.
6. Bring in a debt recovery specialist
Chasing outstanding invoices is time consuming, a burden on your resources and in a lot of cases are unsuccessful but we can alleviate the pressure. Transfer your case to us and we will do the chasing for you. Of course, you can follow the steps yourself as we have outlined but with a debt recovery law firm, we have more tools at our disposal, specifically knowledge of the law, to ensure we are successful and get you your money back – quickly.