Most entrepreneurs encounter debt recovery. An unpaid sales invoice is an ordinary business problem that requires a decision about what to do next.
You can take initial steps yourself. If they do not work, consider a professional collection provider.
1. Act promptly
Decide how many days overdue an invoice should be before contacting the customer, but do not wait more than 30 days.
A friendly reminder is appropriate after seven or ten days.
2. Prepare
Review the contract, invoices and other records before contacting the debtor so you can speak professionally and accurately. A dishonest debtor may not take you seriously if you appear not to understand the position.
Payment default registers can help assess financial circumstances. Entries may indicate financial difficulty. Free and paid services exist; examples include:
Tax debt search
Julianus Group payment default register
3. Stay professional
Do not initially assume dishonesty or insolvency. Non-payment may result from a misunderstanding or mistake.
Avoid damaging the customer relationship through accusations. Choose your words carefully and listen to the explanation.
4. Keep records
Record when, how and with whom you communicated, together with explanations and promises.
Use your customer management system or other database and update it after further contact.
Ask the debtor to confirm payment promises by email. This improves the chance of payment and provides evidence for possible proceedings.
5. Be consistent
Continue communicating even if payment is not immediate. Temporary difficulty or a misunderstanding may be resolved by finding another payment arrangement.
6. Be reasonable
If the debtor cannot pay everything at once, try to agree instalments.
Record a payment schedule in writing where possible.
A separate signed document is best, but an email promise or confirmation is better than an oral agreement.
Conclusion
These steps improve the prospects of collecting invoices. If they do not produce results within a reasonable time, consider professional collection support.
Magilex offers debt recovery support and a demand letter product.
If your business has unpaid invoices, we will listen to your situation and recommend an appropriate solution.