It’s an unpleasant reality for many entrepreneurs: you fulfill an order, create an online invoice, and send it to your customer, only to find yourself waiting.
The best thing to do at that point? Here’s a few tips:
1. ‘Hi there, I’m calling about my invoice’
Often, it’s not necessary to jump straight the a more aggressive option. It can be enough to simply ring your customer for them to remember that they have yet to pay for your products or services.
It's rare that there is any evil intention in non payment - more often than not, the invoice was simply overlooked or ended up in the wrong pile.
A friendly phone call is a nice step here, and also helps establish you as a professional in the eyes of your customer.
2. Send a reminder
If you don’t manage to reach your customers by phone, or if your customer still has not managed to pay the bill a week after ringing them, it’s time to consider issuing a reminder.
Keep up the friendly tone, as it is the most professional way to start. For example:
‘After having checked our accounts, we would like to inform you that payment has not been received for invoice no. xxx before the due date dd/mm/yyyy. We ask you to please review your payment again and send payment for the invoice by dd/mm/yyyy’.
A written reminder carries more weight than a call and also provides a record of contact in the case that non payment continues.
3. Invoice still unpaid? Send another reminder
While you might be losing your patience after two attempts to garner payment from your customer, it’s still best to stick with sending another reminder letter.
Understandably, your business runs on the income you make from providing customers with your product or service, so it’s easy to get worked up. But stick with a simple message. A third reminder must take place before other steps can be pursued.
Your tone should remain professional, but you can stress the urgency of the message. For example:
‘Unfortunately, your payment for invoice no. xxx is still overdue despite repeated reminders. We request once again that you pay the invoice in full by dd/mm/yyyy. If your payment still has not been received by this date, it will be necessary for us to take stronger measures to secure the payment’.
- Tip: with invoice software like Debitoor, you can view the status of all of your invoices at a glance. You can also issue a reminder letter with just a few clicks by using one of our default templates, saving you time and hassle typing out your message.
4. Still no payment? Now it’s serious
There is some good news: usually, it will never get to this point. By issuing several reminders to your customer, this should help them remember and encourage them to make payment on the invoice. You can now make a claim quickly online at gov.uk.
However, if they still do not pay, you’re faced with question of what steps to take next. You can legally claim the payment through the authorities. If it’s less than £750, you can take the customer to small claims court.
Over £750? You can issue a statutory payment demand. This is a legal measure that requires the customer to pay within 21 days. If payment is still not received, you have grounds to present the case in court as a winding-up petition, meaning that assets of the customer will be seized to settle the amount.
5. Alternative #1: sell the amount to a collection agency
If you’d prefer to avoid the legal proceedings, you can sell the payment to a company that has the sole purpose of hunting down overdue payments. These collection agencies will typically ‘buy’ the invoice from you and then pursue the amount from the customer themselves.
While you might not receive the full amount from the agency, you will at least gain some kind of payment and can avoid the hassle, if you prefer.
6. Alternative #2: consult a mediator
A mediation service provides a third party professional to work between you and the customer in order to resolve issues such as non payment. They can help both sides come to an agreement on payment terms or other solutions.
You can search for a mediation professional near you online.