How to resolve overdue invoices

How to resolve overdue invoices

How to resolve overdue invoices

Overdue invoices may cause various problems for small businesses. Late payment Not only is the precious time chasing money wasted, the lost income will also cause serious interference to the company’s cash flow. As you know, cash flow is vital to the survival of small businesses. Unfortunately, late payments have become very common, which puts many small businesses at risk.One Fund Box Investigation It was revealed that 64% of small and medium-sized enterprises processed an overdue invoice, which had the following impact on their company:

  • 79% of small business owners cannot pay their own expenses
  • 23% cannot hire new employees
  • 23% unable to invest in new equipment
  • 20% stopped their marketing efforts
  • 18% delayed employee salary increase or bonus
  • 17% could not build inventory

For customers, unpaid payments are not a picnic either. Late payments can lead to lower credit scores and the embarrassment of being hunted down or handed over to the payee.

Life of invoice

Invoices are generated in several different ways: they can be created before the project starts, or the transfer of goods occurs, or they can be generated at the end of the sale after the agreement is completed. In any case, the invoice notification will notify the recipient of the amount to be paid, when the payment is due, and acceptable payment methods. It may also include purchase order numbers, advance payment discount notices, and penalties for late invoices.

Once the invoice reaches the customer, it is usually immediately paid or entered into the customer’s system, and then payment is arranged. However, sometimes unexpected situations occur. There may be unforeseen circumstances that delay payment, or your customer may simply forget to pay. In these cases, the recommended approach is to take immediate action. You want to give customers the impression that they need to pay on time. .

READ MORE:  Do you need to hire a CFO this year?

So, how do you request payment from overdue invoices? Check out these tips.

Write overdue invoices

You may want to take action as soon as possible after payment is delayed. The definition of being late depends on accepted practices in your industry. You should also consider whether customers repeatedly delay payments, or whether this is rare. Then, you need to decide when to pursue unpaid invoices and politely remind customers about unpaid invoices. This payment reminder usually begins with an overdue invoice letter.

The fastest way to send overdue invoices is via email, which has become a practice accepted by most customers today. Sending by email also allows you to attach a request receipt so that you know when a customer opened your email. Note that the person you sent the message to may have to approve the read receipt before you receive the notification. You can also send overdue invoices by mail, but you will want to know if you have received this letter. No matter how you send the reminder, make sure to record the date it was sent and arrange the time you want to follow up. The invoice program allows you to automatically send reminders to avoid forgetting.

Next, the letter must contain all relevant information about the overdue invoice and payment details, including:

  • Copy of original invoice
  • Invoice number, invoice date, and the date you sent the reminder
  • Details of services provided or products purchased
  • Arrears
  • Payment terms, including late fees
  • payment method
  • Contact’s name, phone number, email, and time when the person can be reached
READ MORE:  7 Methods to Enhance Your Enterprise Weblog

When writing, think about the tone of the overdue invoice letter.You may wish to handle overdue invoices that are delayed from a few days to a week in a polite and courteous manner The tone of understanding. If the invoice is overdue, your language in the overdue invoice letter may be more reliable.

The difference between overdue and overdue is related to time. An overdue invoice means that the payment deadline has recently passed, and an overdue invoice means that the payment of the invoice is quite late. The overdue invoice letter needs to convey the urgency and explain the consequences if the payment is still in arrears. Hope it will not reach this point. Nevertheless, if this is the case, please consider forwarding the invoice to the collection agency and let the customer know if the payment is not in place, this is one of your considerations.

If you feel uncomfortable creating this type of letter, search the Internet for expired invoice email templates to guide you through the process.

new book It is recommended to use polite language when communicating with customers. Their research shows that bIn your overdue invoice letter, politely state that it actually works Help you get paid. Invoices containing terms such as “please pay your invoice” and “thank you for your business” are more likely to be paid by 5%. Moreover, they added that even if the invoice is several months overdue, you should make sure to include the words “please” and “thank you” in your letter. You can also include links to payment options in your banner: “For your convenience.”

After a month or more, it may be time to strengthen your tone. Consider using phrases such as “action required” and “urgent matter.”

READ MORE:  Are you ready to reopen? Update your digital marketing now.

telephone

If your company has sent three or more overdue invoices, it may be time to make a friendly call.Once you call someone, it’s harder for them to avoid you

You will want to answer the phone in a positive manner, and assume that the customer either forgot to pay or is embarrassed to respond because they cannot pay you at this time. If you can reach a consensus, such as setting a payment schedule, your company will have a better chance of getting paid.

Be prepared to accept payments over the phone and have all the information you need so you don’t have to scramble. If the person is not ready to pay at this time, try to find the delay. Consider arranging a follow-up call within a few days to let them know of any late fees you might charge. Late payment fees are usually determined by using an interest calculator, which calculates the cost based on the number of days of late payment.

final hit

If you think the payment will not come, you need to decide whether to send the overdue invoice to the collection agency and report the customer to the credit bureau. If things get to this point, you may lose customers forever, but you may not want to continue doing business with them anyway.

In any case, because delays in payments are common when running a small business, it is important to have a backup plan so that your cash flow is not severely disrupted.Make sure one Business Line CEDIT Make sure you have cash on hand in case there is a serious shortage. The line of credit allows you to get the funds you need and confidently deal with the challenge of overdue payments without sweating.

News related