Learn How to Deal with Overdue Invoices

 In Invoices

At some point in the course of doing your business, you will encounter clients that are refusing to pay their invoices. Devising a way to deal with clients with overdue invoices is very essential. Obviously, you would want to find a way of recovering your overdue payments and yet you will want to consider your business relationships until the issue has become untenable. To address this conundrum and come out the winner, you need to learn some tips that would help you in dealing with defaulting clients and how to get them to pay your overdue invoices.

Write a Friendly Reminder

When you discover a client is not paying invoices that are due. Try and write a friendly reminder to such clients explaining that you are yet to receive the payments due from your invoice and that the effects it has on your business is not positive. Try and remind him to pay up as soon as possible so that you can continue enjoying your working relationship.

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Offer Payment Incentives

If you discover a client has been owing invoices that dates back to say more than 90 days, it might be time to offer incentive to payment. You can tell the client that a total amount of the amount due for payment now will be forgiven if he can pay within three working days. This may make the client to consider paying up your overdue invoices.

Consider Charging Late Payment Fees

In dealing with a defaulting client, you can decide to start inserting penalty for late payment on your invoice. For example, your invoice may carry terms like, payments after 20th April will carry a 5% increment. This would likely make the client consider paying on time.

Stop Transacting with Such Client until the Due Invoices are Paid

There is no point transacting businesses with a client who isn’t paying their invoices. Aren’t you in the business to get paid in the first place? Any client that is becoming a perpetual defaulter should be cut off until they have paid the outstanding invoices. Working for such clients despite the defaults would make them think you are comfortable with your situation, so you should consider putting a stop to your working relationship for the time being.

Try Mediation

As a last resort to getting paid amicably, you can try mediation. The mediation could take place between your client, you and a third party which may be a legal entity or just another business associate. Try and explain the reasons why the client should pay up and when you expect to get your payment. In mediation, both parties should try and listen to each other’s views and try to make fair concessions for each other.

Hire a Debt Collector

If mediation has failed in getting you your money from such client, then you should consider hiring a professional debt collector. Since the client has burned all bridges to amicable resolution, you shouldn’t shy away from doing same too. After all, it is your money and you have worked for it. Debt collectors are known for having a way of making people pay up what they owe, so this should help you in collecting your due invoice from the client.

Businesses flourish when people pay their bill as and when due, this means if anyone isn’t paying their invoices then they are trying to wreck your business. You shouldn’t just sit and watch, try the above tips to get defaulting clients to pay their overdue invoices.

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