According to a report, 87% of companies said that they frequently receive payment after the invoice due date.
There are a few ways to get a client to pay an unpaid invoice. You may find yourself due for a payment that never shows up in your mailbox and you need to take action.
When a client owes you money, it is important to find ways to press the situation and move it forward without burning any bridges along the way.
Unpaid invoices happen to almost every small business owner and can be sidestepped or prevented with a little bit of forethought and a game plan ready to go.
Read on to learn the best options you have in your arsenal to get paid on time.
1. Follow Up Regularly
It’s important to understand the client’s payment timeline to determine when to send payment reminders. Follow up one week before the payment is due and then remind the client again the day the bill is due. If you’ve already sent reminders but still don’t receive payment, make a phone call or schedule an in-person meeting to discuss the bill.
Be understanding and listen to their concerns without making threats or being condescending. Lastly, offer a payment plan or alternative if necessary and paint a tangible picture of what the cost of nonpayment entails. Providing timely, friendly follow-up is key to getting clients to pay unpaid invoices.
2. Establish Structured Payment Plans
These plans allow businesses to suggest payment plans which are more manageable for the customer. This could include breaking up the original invoice into smaller payments over a period of time. Depending on the agreement between the business and the customer, these payments could be a one-time or recurring payment with fixed intervals such as weekly, bi-weekly, or monthly.
Structured payment plans not only provide convenience for customers but also give businesses a better chance of getting paid in full. It allows businesses to maintain their relationships with customers while emphasizing the need to stay current with invoicing and payment practices.
3. Utilize Payroll Funding for a Staffing Agency
One way to get a client to pay an unpaid invoice is to utilize payroll funding for a staffing agency. This type of funding involves providing the agency with the upfront capital necessary to pay their employees until the client pays their invoice.
This model allows the agency to get back on track with payroll while ensuring the client’s outstanding invoice is still being pursued. It also eliminates the risk of having to deplete a business’s cash reserves to cover payroll.
Utilizing payroll funding can also help an agency to retain its valuable employees, avoid cash flow problems and preserve its reputation. By forming healthy working relationships with funding providers and taking advantage of payroll funding, a business can manage unpaid invoices effectively and ensure that invoice payments occur on time.
Effective Methods to Ensure Clients Pay an Unpaid Invoice
The best way to ensure an unpaid invoice is paid quickly is to be proactive. Have a system in place to track outstanding invoices and take swift action when they are not paid on time.
Ask for payment in full and offer payment plans if needed. A friendly reminder goes a long way. Take action now and get your invoices paid on time – you won’t regret it.