Outstanding invoices can cripple a small business. If your clients aren’t paying for your goods or services in a timely manner, you’re likely to have a cash flow crisis before too long. That’s why it’s vital to deal with any and all unpaid invoices before they start damaging your bottom line. Here are a few ways to preserve your income and handle delinquent invoices.
1. Preventative Alerts
Quite often when a client falls behind on a payment it’s because they simply forgot. As you are well aware, running a business means spinning about a dozen plates at any given time, so you can probably understand if an invoice deadline slips your customer’s mind. Unfortunately, your expenses aren’t so understanding. To prevent overdue invoices in the first place, set up automatic reminders that will alert clients to upcoming payment due dates.
2. Gentle Reminders
Even with preemptive alerts in place, you will almost certainly have clients who neglect to pay their bills on time. If they are only slightly late, or if this is their first time missing a deadline, try sending them a gentle reminder to pay their invoice. It might also be helpful to ask the client how you can make the payment process easier for them. This will allow you to secure payment while also improving your customer service.
3. Firm Requests
If your clients haven’t paid their invoice after preventative alerts and gentle reminders, it may be time to adopt a stronger messaging strategy. You always want to do what you can to preserve a positive relationship with your customers, but once their delinquency begins to threaten your business’s cash flow, you need to be firm in your insistence that they pay what they owe. This type of request may feel uncomfortable at first, but the future of your company may depend on it.
4. Outside Assistance
Once you have exhausted every other good faith option at your disposal for collecting payment on outstanding invoices, your only remaining choice may be to involve a third party. Having an attorney, accountant, or collections agency take over the legwork on securing overdue payment can enable you focus on other areas of your business and increase your chances of receiving the money your client owes you. However, going this route is likely to sever any positive relationship between your business and the client, so you should only do so as a last resort.
Unpaid invoices can have disastrous effects on a business’s cash flow. Use these tips to collect your payment and make your business thrive.