Monday, June 17, 2024
spot_img

B2B Sales: How To Chase Unpaid Invoices

Unpaid invoices are one of the most common challenges in B2B sales. A company has paid for your products/services, yet you’re yet to receive the full payment. You sent them an invoice detailing the bill and many weeks have passed since. It has gone beyond the agreed-upon payment date – so what happens next? 

How do you chase unpaid invoices? We have a slew of strategies to try that will help your business gain better control over its invoicing system. We’ll begin with simple ideas to recover your money before finishing with what should be done to prevent unpaid invoices in the future. 

So, let’s begin!

How To Chase Unpaid Invoices

The reason you need to chase unpaid invoices is simple; you’re owed money for services. You can’t let people get away with free products/services and the lack of money interrupts your cash flow

With that in mind, here’s the typical route to go down: 

Remind the client immediately

As soon as you have completed a job or sold a product to a business customer, contact them immediately. Send the invoice with a reminder via email, clearly outlining all payment terms. The sooner you react, the sooner you may see payment. 

Follow up after a week

If the client still hasn’t paid after a week, send another follow-up email. Again, outline how much they owe, when they need to pay it and what happens when they do not comply. If your invoice has a set payment date, you’re allowed to charge interest after this date passes. So, inform them of this if the final date is coming up. 

Those of you without set dates will need to wait 30 days until interest rates can be added. The penalty of paying more money via interest rates is normally a big enough threat to encourage clients to pay immediately. They don’t want to spend any more money than necessary – and there is a genuine chance that they simply forgot to pay you. After all, they’re running a business and have numerous things to juggle at once, so keep this in mind before getting too angry. 

Be open to negotiations

After your second reminder and details of any interest rates or added fees, you are likely to receive contact from the client. Sometimes, they explain why they can’t pay and will ask for some sort of compromise. Perhaps they can only pay half of the debt now, and then the other half in a month. 

It’s not perfect, but be open to negotiations here. A little bit of empathy can save your working relationship and ensure you retain this client in the future. Hopefully, this is a one-off – if it keeps happening, you may be better off severing your ties.  

If all else fails, you’ll need to take legal action. You can do this by hiring a solicitor to sue the client and recover all late payments plus damages, or you can find debt collectors who’ll go and collect the debt for you. 

Either option is fine, but debt collectors/recovery firms may be better in certain circumstances. For instance, if you receive no contact from the client and their business operations have shut down, they may have gone dark. You can’t find any way of reaching them, but many debt recovery agencies offer people tracing services. They know how to track people down and serve debt collection notices. 

It also depends on how quickly you need this to be resolved. Some companies aren’t heavily impacted by one late invoice as there’s plenty of cash flowing through the business. Others depend on this payment to pay for essential expenses. For quicker results, debt collection is your best bet. If you’re willing to play the long game, suing the client may end up gaining more money. 

Keep in mind that this is the absolute last thing you want to do. Never jump into legal action as it basically damages your relationship with a client. Be sure to send reminders and talk to the clients before reaching this point. If all else fails, then you’re left with no choice but to take drastic measures. 

Source – CC0 Licence

How To Prevent Unpaid Invoices In The Future

As you can imagine, dealing with all of the above every single week can be frustrating. You need to keep the cash flowing, which is why unpaid invoices should be minimised. 

Here are some simple tips to help improve your invoice payment system: 

Request money upfront

Instead of letting companies purchase products/services and pay at a later date, demand payment beforehand. It completely eliminates the unpaid invoice problem. 

Alternatively, request a deposit/downpayment. The client doesn’t have to pay for everything in full, but you at least have some money in your accounts to aid cash flow. It means you’re chasing up less cash in the future too. 

Offer multiple payment options

When sending out invoices, offer multiple payment options. This can include payment via bank cards, direct transfers, PayPal, etc. The more options someone has, the more likely it is they’ll pay on time. 

Especially if you create invoices with one-click payment buttons that let people pay in an instant.

Provide discounts for early payments

Going back to the first point, you could offer discounted prices for clients that pay in full. This can be 10 or 20% off the asking price. It’s an incentive for them to make the full upfront payment, reducing any unpaid invoices. 

Similarly, you can offer discounts for early invoice payments. If clients pay the invoice within a week of services/products being delivered, they get a nice discount. Again, it speeds up repayments and leaves you with fewer clients to chase up. 

These three ideas are the best and most effective ways of preventing unpaid invoices. Combine them with the strategies to chase up clients and you’ll be in a much better financial situation. You’ll have fewer clients owing money, which frees up your cash flow and makes it easier to manage your business.  

Featured

Unleashing the Power of AI in B2B Marketing: Strategies for 2023

The digital marketing landscape is evolving rapidly, with artificial...

How To Check if a Backlink is Indexed

Backlinks are an essential aspect of building a good...

How to Find Any Business Owner’s Name

Have you ever wondered how to find the owner...

Do You Have the Right Attributes for a Career in Software Engineering?

Software engineers are in high demand these days. With...

6 Strategies to Make Sure Your Business Survives a Recession

Small businesses are always hit the hardest during an...
B2BNN Newsdesk
B2BNN Newsdeskhttps://www.b2bnn.com
We marry disciplined research methodology and extensive field experience with a publishing network that spans globally in order to create a totally new type of publishing environment designed specifically for B2B sales people, marketers, technologists and entrepreneurs.