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No, it’s not rude to chase unpaid invoices, it’s just good business sense

Nothing is more stressful for a small business than unpaid invoices. Not only does it have a negative impact on your cashflow, but it also gives you more work to do when you really want to be focusing on generating more business.

Even worse many of us find it quite uncomfortable chasing payments and put it off for far too long. But remember, you’ve done the work, the client is happy (hopefully), so you should be paid, and you should be paid on time.

We take a look at just some of the steps you can take.

1. Send a payment overdue invoice

In many cases, the lack of payment will be an oversight (or your invoice may have missed the last payment run), so the first step is to send a gentle reminder.

A couple of days after the invoice is overdue, resend the invoice stating that it’s late. If the client has an issue with the invoice, then it’s likely they will now let you know.

2. Send an email with the unpaid invoice attached

If after a few days you still hear nothing from the client, then send them another reminder. This time include an email, explaining that the invoice is overdue and now needs paying.

Remain friendly and polite but be firm about when you want the invoice paid.

If you are still doing work for them, you might want to put it on the backburner until they have paid.

3. Call them

If you still haven’t heard anything, give them a call. Emails are easy to ignore or miss, so speaking to them direct will establish if there is a problem with paying the invoice.

If they are having cashflow issues, talk to them about possibly paying in instalments but be firm about them keeping to the payment dates.

4. Continue to chase

If they still don’t pay or keep to the agreed instalment schedule, continue to send chasing emails every 3-4 days. This will let them know that you aren’t willing to let the matter drop and hopefully they will get so sick of your emails, they will pay up!

Also it’s worth sending a signed for letter by post, as that way you have proof they have actually received your correspondence.

5. Send them this letter

If you still haven’t been paid, send them this letter. While taking County Court action sounds drastic, just threatening a CCJ could be enough to get them to pay, as if they don’t it could adversely affect a company’s credit rating for six years!

Tips to avoid invoice problems in the future

If you’ve never had any invoice disputes or had to chase an unpaid invoice, then you’ve been really lucky, but that doesn’t mean it won’t every happen. But there are some things you can do to mitigate the risk of it happening.

  1. Make payment terms clear from the outset: this is particularly important with any new clients. If the client hasn’t been referred to you by someone you trust, you may even decide to ask for payment before the work starts or for an initial deposit.
  2. Include bank details on the invoice: this might sound obvious, but it’s an easy mistake to make. Having an invoice template is the best way of ensuring you don’t forget details such as these.
  3. Agree a cost upfront: while it might be tempting to take on work, especially from an existing client, without agreeing a cost upfront, don’t! It’s fine to say something will be ‘in the region of’ if you aren’t a 100% sure, but always give a ballpark cost. And do this by email and ask the client to confirm they are happy. This makes future disputes a lot easier to deal with.
  4. Try and be super organised: this means not only keeping exemplary records about also invoicing at the same time each month. This will make managing your finances a lot easier and in turn will help regular clients manage their cashflow.
  5. Consider keeping timesheets: if you don’t work on-site with a client, consider keeping timesheets of how long particular jobs take. This not only means you can justify what you charge (and show the client the timesheets if there is a dispute), but also it will give you a good idea of how long jobs really take you. Inevitably, things always take longer than you think, which means you might be undercharging.
  6. Chase any outstanding invoices promptly: just as you need to send invoices promptly, chase them promptly too.
  7. Hire an accountant. While it might seem like an unnecessary expense, having an independent third party on hand can actually save you money in the long run. Not only will a good accountant put in place any necessary accounting software to help you manage your accounts more efficiently, but they can even chase payments for you, which means you won’t have to have any awkward conversations about money.

While chasing money isn’t how you want to spend your days, unfortunately it is all part of being in business, so is very much a necessary evil.

Hopefully, this will have given you some ideas of the steps you can take to mitigate such problems occurring in the first place and what to do if they do happen.

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