No matter what business you are are in; unpaid invoices are an inconvenience. It would be nice if you could send out an invoice and watch the money roll in, but its a fact half of all invoices are paid late if paid at all.
Some people make a living out of calling on past due invoices. Their techniques aren't magic, just a combination of confidence and persistence. You could try their techniques with your outstanding invoices by implementing the methods below.
Email a Payment Request
Your first move when an invoice is late is to send an email; this is a less stressful solution that might be a quick fix. Start your email with a polite greeting, include the invoice number and ask when you can expect payment. The contents of the email should be as short as the invoice itself.
Here’s an example of an email that’s clear yet friendly:
I hope this note finds you well. I want to follow up on invoice #12345 that I emailed on April 1. Do you know when we can expect to see payment? Please let us know if we need to resend the original invoice.
I appreciate your timely response.
Send Additional Documentation
You could send another invoice with a "past due" stamp on it, or attach the original invoice when you send your email requesting payment. If a client has multiple accounts, you may consider sending a statement of accounts which summarizes all of their accounts in one document. While they may review it, you may still have to follow up with them on a more personal level.
Demand a Late Fee
You can always require more money if a payment is late, but you can't do it out of the blue. When you first sign a client, you need to share your late-fee policy and communicate it upfront with your payment terms.
Make sure to identify late fees on your invoices too. Don't overcomplicate it. Do the math for your client. Say something like:
Total due by 1 August: $100
Total due after 1 August: $110
Communicate with your client when they’re in late fee territory. Offer an incentive such as waiving the fee if they pay right away.
Make the Call
No one enjoys an awkward conversation, but sometimes it has to be done. People can always screen your call, but once they are on the line, it's hard for them to ignore what you have to say. Try not to get into a debate with the client. Just explain what is overdue and ask when you can expect payment. Don't be afraid of the silence, as they are probably looking over their books. Stay on the phone until they tell you when the payment will arrive and then notate their account.
Conclusion: Build Strong Relationships
You have a lot of options for getting your outstanding invoice paid, but sometimes they don't work, and you get stuck with an unpaid invoice. If you have multiple unpaid invoices from the same client - consider firing them and then look to write it off, so your accounts reflect the lost income.
If you want to avoid the hassles of unpaid invoices, make sure you research any potential clients to make sure they are legit. Make sure you have a signed contract, keep detailed records, and ask for payment upfront. Work on establishing strong client relationships, which can help extinguish a potential problem in its tracks.