Chasing unpaid and overdue invoices is a task that not many people like to do. Dealing with the problem promptly and in a structured way can make the process easier, however, as well as getting the invoice paid as quickly as possible.
The step-by-step guide below is just that – a guide. In other words, you shouldn’t rigorously follow it in all circumstances. For example, it is probably not a good idea to send formal requests for payment to a long-standing client without first discussing the issue with them informally.
Therefore, the guide below is best used in conjunction with your own judgement.
Step 1 – Check
The first step you should undertake when an invoice becomes overdue is to check everything is right on your side. This includes checking whether the customer has sent you a query about the invoice that has not been resolved yet. You should also check the invoice itself including:
- Details of the products or services provided – has the customer received the products or services in full and, if so, when did the customer receive them?
- The invoice date.
- The amount – do your sums add up.
- The customer’s contact details, paying particular attention to the address you sent the invoice to. Did you send it to the right person?
Step 2 – Keep a Record
It is important you record every stage you go through to recover the debt. This means recording the data of all communications as well as what was discussed and what was agreed.
Step 3 – Send an Email
You should send your first email to the customer about the unpaid invoice around two working days after the due date. Check the customer received the invoice, ask is there anyone else you need to speak to about it, and remind them to pay. Include a copy of the invoice in the email as well. Keep this email informal and friendly.
Step 4 – Send Another Email
You should send this second email about one week after sending the first. Again, keep it informal but this time ask if there is a problem with the invoice or getting payment.
Step 5 – Call the Customer
Follow up your email the day after you send it with a phone call. Find out if there is anyone else you need to speak to about the invoice, as well as asking when it will be paid.
Step 6 – Email the Customer
Immediately after the phone call, send the customer an email summarising what was said and agreed.
Step 7 – Phone the Customer Again
Normally, you should make this phone call about seven days after the previous one. You may need to use your judgement on it, though. For example, you may have been told the person required to pay the invoice is off for two weeks. In this situation, calling the customer again after just one week will be counterproductive.
When you do make this phone call, the objective is to remind the customer again and also get a clear commitment of when they will make the payment.
Step 8 – Send another email
Straight after the above phone call, send the customer an email summarising what was said and agreed.
Step 9 – Send a Letter
If a week passes and you still haven’t received payment, you should send a formal letter requesting payment. Explain to the customer you may start charging interest if they don’t pay.
Step 10 – Send a Final Warning Letter
You should send this letter two weeks after the first, ensuring you send it by recorded delivery. It should include details about the invoice and a deadline to pay, i.e. within seven days. This letter should also include details of what will happen if the customer doesn’t pay, such as passing the matter to your solicitor.
Step 11 – Instigate Formal Proceedings
If the customer has not cooperated up to this point, you will probably have no other option but to recover the debt with the help of your solicitor.
To get more help, advice, or practical support with your business, please contact a member of the Gilroy Gannon team today.