What is invoicing?
Invoicing is the act of sending an electronic or paper bill to your client for any goods or services that you gave them. In recent times, electronic invoicing software and systems have taken over the corporate world, so you should also check out some invoicing software for your business. Make sure to try out software like Zenbill's Invoice builder, since it is effortless and straightforward. In this article, we will discuss how to handle overdue invoices and what course of action you take if your payments are overdue.
What are the different stages of invoicing, and what are late invoices?
There are different stages of invoicing. An active invoice is where this cycle begins. An active invoice is an invoice that is drafted and checked but has not yet been sent to the sender. If the client pays the dues, the invoice is stored in the system and checked as paid. This article will deal with the invoices the client does not pay. Every invoice has a deadline, which the client has to meet. Otherwise, payments would always be late, and the business would suffer at the hands of the client due to their laziness or inability to pay. There is usually a time mentioned on the invoice after which the concerned seller will start to take steps to ensure that they are paid. These steps will vary in nature and intensity as time progresses.
What are the different ways to handle overdue invoices?
This should be your first course of action when handling overdue invoices. All you need to do is remind the concerned party with a friendly email about the fact that the payment deadline has passed. Frequently, people tend to forget these things due to conflicting schedules and work burdens. Hence your reminders will prompt the clients to pay. Make sure to attach the original receipt to the email and use a friendly tone. Ninety-nine %of the time, this method will help you get your dues.
Follow up Calls
If for some reason, your emails and other channels of communication are going unheard and the payments are now very late, you can opt to call them as well. Make sure to use a friendly tone at this stage as well since they could have a valid reason for not paying. Calling them up, discussing and solving their issue regarding your payment would help instill confidence and pave the road for future collaborations as well.
Your priority is to always help the customer or the client in any way you can if they are going through a rough patch. This will help with future collaborations, and their confidence in your brand will skyrocket. This will also help to retain them for future work as well.
If you approach the client and find out that they are unable to pay the total amount, try giving them installment options with an upfront payment so that they can understand that you understand their situation and are looking for a solution with them. You should try to solve problems and not create more at this point.
Late fees are another step you can take to make sure that your clients pay on time. However, you can not just charge late fees unless and until you have already put it down in the agreement both parties signed earlier and you made it clear that there will be a percentage or flat fee after the due date for the payment has passed. You could put a flat late fee or a percentage of the total invoicing amount and factor in the time that has passed since the due date.
Legal action should be your last resort if you have tried all the above methods to get your payment. There are some pros and cons to using this method. If the fee is nominal, most businesses tend to let it go because the cost to chase the payment would exceed the invoicing amount and equal a loss. However, if the payment is significant and you have the legal and financial means to go after clients, make sure to go after them hard and seek the help of professionals. This will help your PR a lot since it will warn your existing and potential customers that you do not tolerate late fees and cannot escape them.
Thus, we can deduce that there are many ways to tackle overdue invoices and how you can get your well-deserved money from them using both a friendly and offensive front.