7 Tips to Collect Unpaid Invoices | Tally Services

As a small-business owner, you know the importance of getting your invoices paid in full, and on tIme. However, for many businesses, this is easier said than done. In fact, a recent study found that as much as 64% of small businesses are hurt by unpaid invoices. That’s huge – more than half of small businesses struggle with getting paid on time. If your business is in this category, we have a few tips for you to help you collect unpaid invoices and protect your cash flow. 

Tips to Collect Unpaid Invoices

1. Follow Up in Person or Over the Phone – If your only form of communication up to this point about the invoice has been via mail or email, try other means of communication to connect. You can try following up with a phone call or, if the business is local, simply stop by. Many business owners are leery of doing so because they fear confrontation, but sometimes an in-person follow-up is enough to convey the importance and urgency of paying the bill. Be confident, but polite, and remind them of their unpaid invoices.
   

2. Try Another Contact – If you’ve only been in contact with one person at the business, try another person. Reach out to that person’s boss, or even other higher-ups in the organization to work to get your bill paid. It’s possible that the contact you have is the roadblock and is simply holding up the process, while others might not even be aware of the issue.
   

3. Consider a Payment Plan – If the business or individual is truly unable to pay the bill and has communicated that with you, it’s possible they can pay off the debt over time, in smaller amounts. You might consider a payment plan that will make it more realistic for you to collect on the bill. If you go this route, just make sure the terms of the payment plan are very clear, in writing, and signed by both parties – this will give you legal recourse if they fail to pay the bill off over time.
   

4. Offer a Discount – While you don’t want to get in the habit of this, some businesses will be motivated to pay the entirety of the bill at once if you incentivize them with a special offer or discount. Getting paid something for the goods or services is better than nothing. Plus, offering a discount is certainly easier than going to small claims court. Cut your losses and find a way to encourage them to pay.

5. Send a Formal Notice – If you have tried everything on the list and the bill is at least 90 days overdue, it might be time to send them a formal notice that you plan to take legal action if they do not submit payment. This last-ditch effort should be stern, yet professional, and be very clear about the repercussions if they do not pay by the date listed. Often this is enough to get them to pay, but keep in mind that more serious steps may be necessary.

6. Consider Small Claims Court – Every state offers small claims courts to help businesses collect on unpaid invoices if it gets to this point. Every state has different minimums and maximums for how much you can collect, but if the invoice amount is significant, it might be worth considering. You will be required to collect evidence to prove the amount they owe you, and a judge will determine if you’re entitled to the money from there. 

7. Ask for help! – If your business struggles to collect payments regularly, it might be time to ask for help. A professional accounting team such as Tally Services can help you set up your systems and vet your customers to ensure you’re getting paid in full, on time.

The best way to make sure your invoices are paid on time is to have a solid invoicing process that makes it very clear to customers as to what you expect and makes it easy for them to pay you. Click here to learn more about smart invoicing practices to keep you from having to chase unpaid bills.

As a small-business owner, it can be very challenging to stay on top of all aspects of the business, including your invoicing and collections processes. If your small business could use help managing this side of things, Tally Services is here! We’re a Northern Colorado business accountant, and we will help you create systems and practices that will ensure your invoices are paid and your cash flow is strong. Contact us to learn more!