As an entrepreneur, it is very annoying if you often have to wait a long time for payment of invoices sent. Nevertheless, it unfortunately happens more than once that it takes a very long time for the paying party to fulfil its duty. But what do you actually do if your invoice is not paid at all? How can you best request the customer to pay the invoice in a friendly but urgent manner? We will give you some tips in this blog!
Step 1: send a first reminder
Has the payment term of your sent invoice passed, but have you not yet received your money? The first step you can take in such a case is to send a short e-mail. Of course, the customer may have overlooked the invoice due to certain circumstances – that can happen to the best of us. Therefore, in this first payment reminder, keep it friendly at all times. By drafting a short, friendly e-mail, in which you ask in a neutral tone to pay the invoice as soon as possible, you offer the customer the opportunity to correct his or her mistake. We recommend using a 7-day payment term in this first reminder e-mail.
Step 2: get in touch by phone
If the 7-day payment term from the first payment reminder has also expired, but the invoice has still not been paid. Then we recommend contacting the customer by phone this time. Despite the fact that it can of course be very frustrating that payment is taking so long, we advise you to remain polite at all times during this conversation. By entering the conversation in a friendly manner, you increase the chances of the invoice being paid quickly. During the conversation, ask why the invoice is taking so long to be paid. At the conclusion of the phone call, we recommend making a payment appointment again with a deadline of 7 days.
Step 3: send a second reminder
If payment is still not made after the telephone contact, it is time to send a final payment reminder. You can send this reminder by e-mail, but you can also choose to send an official reminder by post. Clearly state in the reminder which specific invoice it concerns and when it should have been paid, to nip confusion in the bud. Always remain polite in the reminder, but do state clearly that further steps will be taken if payment is still delayed. What is the next step in this? Engaging a collection agency.
Step: 4 involve a collection agency
If your various payment reminders via e-mail and phone have not helped, it is time for the last resort: using a collection agency. Be careful here: the costs for these collection agencies can vary from one agency to another. Collection agencies often work on a ‘no cure, no pay’ basis. This means that the agency is only paid if a solution to the unpaid invoice is actually found. However, this is not the case with every agency. So be careful here, otherwise the costs for the collection agency can be high.
Step 5: take legal action
Are you unable to reach a settlement with the customer even with the help of a collection agency? Then unfortunately there is nothing else you can do but go to court. For this, it is important that you have business legal expenses insurance so that you can hire a lawyer.
After this, the customer will receive a summons, which you will use to take the customer to court. In this summons, you will specifically state the amount to be paid and provide proof of what you are taking the customer to court for, including the previous steps you have taken in this regard.
How do you avoid non-payment of your invoice?
If you often have to wait a long time for payment of sent invoices or if they are not paid at all, in most cases this is beyond your control. Nevertheless, there are a number of things you can do yourself to prevent your invoice from not being paid.
Improve your own invoicing process
Are you usually waiting a long time for your invoices to be paid? Then it is a good idea to take a look at your own invoicing process. Take a close look at your invoices, for instance. How do they look? Are they clear enough? Communication with the customer is also very important. How does that work? Is there anything you can improve? If you have optimised your own invoicing process to perfection, you will see that future payments will be made faster. Yet of course, this is not entirely up to you. This is because usually the problem is not on your side, but on the side of the paying party. At such a time, is there nothing more you can do on your side to receive the money from the relevant invoices and thus improve working capital? Yes, there is: factoring, for example.
Factoring
Do you increasingly find yourself waiting a long time for a customer to pay his or her invoice? In such a case, factoring offers the solution for your situation. But what is factoring and how does factoring actually work?
Factoring is all about selling invoices to a factor, which then advances the corresponding amount. This alternative financing method is increasingly used among more and more entrepreneurs. With Factris, you can expect your money in your account within 24 hours, making you no longer dependent on the customer’s payment term. Generally, every invoice sent has a payment term of 30 to 90 days, which is therefore a thing of the past with factoring. Moreover, after taking over the invoice, Factris takes care of the further financial settlement with the customer. As a result, you no longer have to worry about collecting the relevant amount from the customer.