What to Do When Your Customers Haven’t Paid Their Invoices
With nearly 60% of all invoices in the US being paid late, a statistic recorded before the COVID-19 pandemic, companies that rely on invoice payments have difficulty maintaining a steady and predictable cash flow. To help alleviate this issue, here are a few steps you can take:
The best way to deal with late payments is simply to not have them at all. While this is much easier said than done, there are still steps you can take to try and minimize the number of late payments you have. Making sure your client knows that you have rigid payment guidelines can help emphasize the importance of meeting your invoice deadlines.
Immediately billing your customers after they utilize your services makes it clear to your customer what they need to pay for and gives them ample time to pay the invoice. Using simple and clear language to present information such as the exact day for the invoice deadline, will help your customers easily understand what is needed from them.
Charging fees for late payments can be an effective way to make sure that customers will prioritize your payment.
You may even decide to outright deny your services to a late-paying customer. This definitely expresses your intentions to customers, but may also drive away customers, new and old alike. Make sure to consider every alternative before relying on this debilitative measure.
Contact Your Client
Always keep in contact with your customers, especially if you are not receiving a reply or are only receiving vague answers.
Start off by sending a polite reminder to your customer via email. Continue sending follow-up emails and if there is still no response, contact them directly via phone. If necessary, send a formal letter and statement of account to make it clear that you will be pursuing legal action.
Invoicing software will keep track of your invoices for you and saves you a lot of time. Automation can help you immediately notify your customers of invoices and send them reminders of invoice payments.
If you are still struggling with late payments, one way to bridge the financial gap caused by the invoice payment period is to use invoice factoring. Invoice factoring entails you selling your unpaid invoices to a factoring company and they will provide you an immediate advance payment on those invoices. They will also assist you with invoice collection. Invoice factoring is an inexpensive and quick alternative financing solution to help your business’s cash flow and not have to rely on potentially late customer payments.
Accel Business Funding has provided invoice factoring and has funded many businesses for more than $380 million. When banks say NO, we say YES to funding in 24 hours!