6 important steps to combat unpaid invoices and get paid

Collecting on unpaid invoices can be a daunting task. It can be nerve-wracking trying to approach the conversation firmly enough to get you paid but delicately to not damage the customer relationship.

I have quite a bit of experience chasing unpaid invoices within my 30-year accountancy lifetime – including going out on the road to collect cheques when there was a two-week postal strike in the late 1980s (when they said the cheque couldn’t be posted, I said I’d pick it up, so no problem!).

I can assure you the necessity to take drastic measures such as that are rare. In fact, some of my go-to tactics can be implemented before you send your next invoice and will eliminate the need for an awkward conversation later on.

Here are six easy tips to speed up those unpaid invoices.

1. Ensure the invoice has all the relevant information

This includes the VAT number if registered, purchase order number if there is one, correct prices, quantity and description, payment terms and obviously the supplier and customer’s full names and addresses.

These details are common reasons for delayed payment on invoices. Stay on top of these so your client has fewer reasons to come back to you with questions.

2. Put your full bank details on all invoices and statements

This includes the international bank account number (IBAN) and the bank identifier code (BIC). If you have other payment options or methods available, put those on the paperwork, too, such as via PayPal (give email address), over the phone by credit card, and so on.

Try to make it as simple as possible for your customers to make a payment. If someone has to stop the payment process to hunt for bank details, address to send cheque to, etc, they are less likely to make the payment.

3. Pick up the phone and speak to your customers early

For larger invoices, I give a courtesy call a week after I’ve sent the invoice to make sure it has been received and there aren’t any discrepancies. All sales invoices matter and should be paid on time but the larger ones should be treated with a personal touch.

If you wait until the invoice becomes overdue to make a call, only to find out it wasn’t received or there was an error on it, then it could put payment back another month as it may have missed the payment run. Don’t expect the customer to contact you to say there is a mistake or ask for their invoice – this rarely happens.

4. Keep a journal of all calls and responses

I include the date, time, who I spoke to and what their response was. Especially for that first courtesy call. If you have to phone again and the story has changed as to why payment hasn’t been made, I find it works well to repeat the date you spoke to them previously and the details of the conversation there and then.

If they know you are keeping tabs, they are less likely to shirk in their duty to pay. I just use a simple Excel sheet for this as it’s easy to run through but there are loads of ways you could keep notes – on CRMs or with accounting software, for example.

5. Amend your invoice issue date – part 1

If you send monthly invoices on the 1st of the month, change the issue date to the day before. This makes the invoice fall into the previous month. For companies that run their payments net 30 days, (ie, payment is 30 days after the end of the month of the invoice date) this will bring forward your payment by a month most of the time.

For example, an invoice dated 1 April will be paid at the end of May; however, an invoice dated 31 March will be paid at the end of April. Your payment terms may be 30 days but the majority of companies would just slot it into their net 30-days routine.

It is essential to establish payment terms up front. Some are set in stone and could even be 60 days net, which could mean you don’t get paid for 90 days after the invoice date. This is why this is important.

6. Amend your invoice issue date – part 2

Another trick with the date being one day different is if you make a statement run at the end of every month, ensure it’s dated for the first of the following month. This will make the invoice appear older than it actually is.

How much you benefit from this depends on how your statement reports are structured. Either way, make sure you send monthly statements as some companies will only pay on statements.

Say goodbye to unpaid invoices

Technology such as e-invoicing and automation virtually eliminates the common factors that cause late payments.

Having an invoice payments functionality within the accounting software you use will help to resolve frustrations with payments admin and will make the payments process easier for your customer, meaning payments become much faster within your business – as a result, you will get paid faster.

Share your experiences on chasing unpaid invoices in the comments below.