Tracking unpaid invoices can be a drain on your time and effort, irrespective of your size of business. SMEs, small businesses, and freelancer agencies often face a significant issue in money loss owing to unpaid invoices.
It can be difficult to navigate one’s way effectively dealing with unpaid invoices. If you’re dealing with unpaid invoices, you must know how to minimize non-payment issues. Besides that, you also need to know steps in chasing unpaid invoices efficiently and further steps for clients who still won’t pay. Learn more about these relevant skills in this article.
Here are five ways you can effectively handle unpaid invoices to improve getting financial payments on time
Before you consent to provide any service to your client, be transparent about expectations from the client’s end and your end. Let your client know:
Before starting your engagement, formulate an easy-to-understand contract to establish transparency in terms of expectations. A contract is great for covering all the pointers mentioned above.
In this way, as a professional, you can avoid any misunderstandings with your clients. In case of disputes, the contract is excellent as a reference point.
Getting paid for your services upfront is easily one of the best ways to minimize non-payment issues. However, when you’re already established and have a track record, it’s normal to ask for full or partial payment in advance in many industries. However, asking for full payment in advance can be challenging, and your clients might disagree with that mode.
Freelancer agencies can consider using an appropriate website as an intermediary. In this way, the client can place the money in Escrow. After successful project completion, the freelancer teams get the money.
Instead of relying on PayPal requests or emails requesting timely payment, it’s best to send professional invoices to all your clients. Clients might ignore your PayPal or email requests.
If you are a business owner, one of the best ways to send professional invoices and track all your payments is to opt for invoice automation software. It shows professionalism with a complete invoice and organized financial management.
SMEs may tend not to chase up payments for fear of looking “desperate.” They might also be afraid of losing out on future work opportunities with the client. And in many cases, the client might genuinely have forgotten to pay.
So, sending a gentle reminder email a week after sending the invoice to the client is a great idea. But, it’s your money and delays impact your finances.
Invoice automation software is excellent for tracking delayed payments and sending reminders to clients! Analytic reports in invoice automation software and accounting systems show outstanding payments and financial impacts to your bottom line.
If your client is still ignoring you and not paying despite all the courses of action mentioned earlier, you can consider taking legal action. Moreover, if the outstanding debt value is worth the outlay, it is best to contact an attorney. You can contact a small claims court or opt for other legal courses for this purpose.
A 2019 report by Statista showed that 13% of SMEs in the UK expected late payment issues/ cash flow issues to be a significant obstacle to development!
Consider following the tips mentioned above and opt for invoice automation software to help deal with unpaid invoices on time. Besides that, one can integrate their banking transactions with invoices too.
See the benefits of automated invoice management:
Better overview. Less accounting work. More time for your ideas.