Timely payments for products delivered and services rendered are essential for the prosperity of any company. However, every business sometimes has to deal with customers who are slow in paying their bills. Here are some strategies that will assist you in collecting unpaid invoices easier and quicker.
Offer Terms Only to Qualified Clients
You can radically improve the collection of unpaid invoices by finding out whether potential customers have a history of prompt payments. To accomplish this, check commercial credit reports, which can be obtained from companies such as Experian, Ansonia, and Dun & Bradstreet. Only offer 30 to 60-day payment terms to clients with good credit histories, and insist that others make their payments on delivery or upfront. Even when you offer terms, have an attorney delineate them in detail in a contract.
Be Diligent with Paperwork
After your goods are delivered or services completed, have your client sign an acceptance letter. This should assist you with any disputes and make the collection of unpaid invoices easier. Send your invoice out promptly along with a copy of the acceptance letter.
Follow Up When Necessary
Despite your best efforts in vetting your clients and being diligent with documentation, some customers will be late in handling their unpaid invoices. After clients have missed payment deadlines, email or call them to ensure there are no difficulties, and then set a new date for payment. If this is also missed, repeat the process. When actual disputes arise, deal with them professionally and courteously.
Get Help from Outside
In a minority of cases, clients may persist in nonpayment. Under these circumstances, it is best to resolve these situations by obtaining assistance from a collections agency or an attorney. This will leave you free to carry on running your company.
Boost Cash Flow with Financing
These strategies should help you cut down on your unpaid invoices. However, offering terms draws in clients, so sometimes you cannot avoid delayed payments of invoices. If this occurs, consider filling the gaps in your cash flow with financing such as an asset-based loan or invoice factoring.
For more advice on collecting unpaid invoices, contact Speed Funding and ask about our factoring services.