By Shweta Jhajharia, The London Coaching Group
If your business is sitting on a pile of uncollected invoices, you’ll know that chasing invoices is tedious, trying, and time-consuming, and it may be that, like many other business owners, you feel like it’s easier to throw in the towel than keep plugging away.
But let’s take a moment to study the cards you’re holding: Unless an alternative period of time is agreed, payment is late 30 days after the customer receives an invoice or 30 days after goods have been delivered or services provided (if later), and if another business is late paying for your goods and/or services, interest and debt recovery can be claimed. That’s according to Gov.uk. (Source: https://www.gov.uk/late-commercial-payments-interest-debt-recovery/when-a-payment-becomes-late)
In other words; the law is on your side and, with this in mind, here is a simple four-week plan to get your invoices paid:
There are a number of reasons why a customer may be a week late paying your invoice, so at this stage the appropriate action is a gentle nudge; a firm but friendly email reminding your client that their payment is overdue, and requesting they arrange payment as soon as possible.
Most clients will appreciate the reminder—they’ve got paperwork to do too—and payment will likely be immediate. Be understanding, but be strict about sticking to your system. Do not wait longer than a week to send your friendly reminder.
If your email has not resulted in payment of your invoice within seven days, it’s time to make a phone call. Ideally, this will be made by a junior member of your team—at this time you’re not treating this as an urgent matter—and again, the communication should be friendly, but firm, and if appropriate may include an offer to help with any issues that might be standing in the way of your invoice being paid. For example, if there is a legitimate reason behind the non-payment, such as the invoice being disputed, this can be addressed quickly rather than waiting until your customer’s query makes its way to the top of their to-do list.
If payment has still not been made, the matter should be passed to a senior member of your team, who should send another email. This communication will be sterner, advising that the matter will be escalated if the invoice is not paid within a week. Again, the offer to discuss any issues your client may have with the invoice should be made.
Unless your customer has contacted you and discussed any difficulties they are experiencing, a senior member of staff should now call, pointing out the various communications that have taken place, emphasising the seriousness with which you view their non-payment, and making clear that if the invoice remains unpaid, you will proceed with legal action. Depending on the circumstances, you will then have to decide whether to extend the deadline for payment, agree a payment plan, start legal action, or write off the invoice and move on.
Hopefully, written-off invoices will be few, and you’ll never have to involve a solicitor, but if that’s where you need to take the matter, better that that happens in four weeks, rather than you not knowing the situation you are in.
Shweta Jhajharia, pictured above, is founder of The London Coaching Group.