How to Chase Unpaid Invoices: An Expert Guide

As a business owner, one of the most frustrating parts of running your own company is dealing with unpaid invoices. It can be incredibly time-consuming and stressful trying to chase down money that you are rightfully owed. However, it’s something that every business has to deal with at some point or another.

How to chase unpaid invoices is a common question that comes up for many an Accountant, finance manager and so on. But what is the best strategy for how to chase unpaid invoices?

We have called upon the expertise of the highly experienced Business Debt Collection specialists, Federal Management to help us compile this handy guide. Federal Management celebrate their 20th year of success in the Debt Collection field in 2024 so who better to call upon for tips on how to chase unpaid invoices.

In this expert guide, we will take you through the process of chasing unpaid invoices, from prevention to collection, so that you can get your hard-earned money back without losing valuable time and resources.

Prevention is Key

The best way to tackle the issue of how to chase unpaid invoices is to prevent them from happening in the first place.

Here are some tips for preventing late payments:

• Clearly outline payment terms and expectations in your contract or agreement with the client.
• Send out invoices promptly and set clear due dates for payment.
• Follow up with clients who are approaching their due date to remind them of their payment obligation.
• Offer incentives for early or on-time payments, such as a small discount or added services.
• Establish a late fee policy and make sure it is clearly stated in your contract.
• Consider implementing a credit check system for new clients to ensure they have a history of paying on time.

By taking these preventative measures, you can set clear expectations and boundaries with your clients, making it less likely that you will have to chase unpaid invoices.

Stay Organized

Aside from prevention, organization is key when it comes to how to chase unpaid invoices.

Here are some tips for staying organized:

• Keep track of all invoices, including dates sent and payment due dates.
• Use a system to track payments and highlight any late or outstanding ones.
• Send out reminders when an invoice is approaching its due date.
• Keep detailed records of all communication with clients regarding the invoice, including phone calls, emails, and letters.

This will come in handy if the issue escalates to legal action.

• Consider using invoicing software or hiring a bookkeeper to help keep track of payments and invoices.

By staying organized, you can ensure that no invoice falls through the cracks and that you have all the necessary information at hand when chasing unpaid invoices.

Communication is Key

When it comes to dealing with the problem of how to chase unpaid invoices, communication with your clients is crucial.

Here are some tips for effective communication:

• Be polite but firm in your communication.
• Clearly state the amount owed and the due date.
• Ask if there were any issues that caused the delay in payment and try to work out a solution together.
• Follow up regularly and document all forms of communication.

It’s important to maintain a professional relationship with your clients, even when dealing with late payments. By keeping lines of communication open and being understanding, you may be able to come to a resolution without having to resort to legal action.

Collection Strategies

Despite taking preventative measures and staying organized, there may still be times when you have to take more aggressive action to collect unpaid invoices.

Here are some collection strategies to consider:

• Send a final demand letter, clearly stating the amount owed and the consequences for non-payment.
• Consider hiring a debt collection agency to handle the process for you.
• If necessary, pursue legal action through small claims court or hiring a lawyer.

It’s important to weigh the cost of these options against the amount owed and your chances of successfully collecting. In some cases, it may be more beneficial to write off the debt and move on, rather than spending valuable time and resources pursuing legal action.

Choosing a highly reputable Debt Collection Agency like Federal Management can bring massive benefits. Not only will it minimise the costs to chase unpaid invoices, you also get 20 years of experience in prevention and expertise.

How to chase unpaid invoices – Learn From the Experience

Chasing unpaid invoices can be a frustrating and draining experience. However, it’s important to learn from these experiences so that you can prevent them from happening in the future.

Here are some tips for learning from unpaid invoices:

• Keep track of which clients have had late payments or unpaid invoices in the past and consider implementing stricter payment terms for them.
• Re-evaluate your invoicing processes and see if there are any areas where you can improve to prevent future issues.
• Consider asking other business owners for their tips and strategies for dealing with unpaid invoices.

By learning from your experiences, you can make adjustments to your business practices and hopefully avoid dealing with late payments in the future.

In conclusion, chasing unpaid invoices is a necessary but frustrating part of running a business. By taking preventative measures, staying organized, maintaining open communication with clients, and understanding when to pursue more aggressive action, you can minimize the impact of late payments on your business.