One way you can ensure that your company’s doing well is by checking your cash flow. If by chance, this is disrupted by unpaid invoices or late payments by your customers, then this can negatively affect your business operations.
In other words, bad debts might result in lowered profitability, thus risking your business. Hence, to prevent this, it would be best to prepare a system to help you collect your customer’s unpaid debts and late payments. To give you an idea, here are a few ways that you can do this.
Take Legal Action
One of the immediate actions you can take for your company is legal, especially if you feel like there’s no other solution. So, what you’ll need first is to ask for commercial lawyer help services from law firms. They’ll be able to give you a proper insight into the possible risks and weigh the possibilities for you. In this way, you can better see things clearly with the help of a legal advisor.
The primary thing you must do when you want to sue someone who owes you money is to collect your evidence for legal proceedings is to collect your evidence. This includes their persistent disregarding of your notices,
Remind Them With Their Overdue Invoice
If you don’t want to take this to legal proceedings and want to try what you can do, you can consider sending them the overdue notice. It would be better to give them the benefit of the doubt and instead send them an email to remind them.
You can send the original invoice with an overdue stamp and attach it with a formal letter recounting the agreement and unsettled account. You can continue sending your customers until they pay or find other alternatives such as calling them.
Calling is usually the next solution if they remain unresponsive after numerous email reminders. You can continue doing this every day until they pay. However, remember that you shouldn’t be aggressive when dealing with them, but you shouldn’t stop asking either. Emphasize that you’ll need them to settle their accounts as soon as possible.
Keep your call direct so that you can discuss much more important stuff and make this transaction much easier for them to pay up than dodge your calls. After the call, don’t forget to send the overdue invoice again if necessary.
Charge Late Payment Fees
Charging late payment fees is a preventive measure rather than a guide for collecting unpaid invoices. Nonetheless, it’s an effective process that can keep people from paying past the due date. Moreover, you can consider late fees as a payment of letting them take their time in paying their debt.
If you’re planning to implement late payment fees, you must highlight the terms and conditions of your contract in doing business with them. You can charge late fees by a fixed amount like $25 for every 30 unpaid invoice days or present the percentage of the total of the invoice, such as 1% or 0.50%. This entirely depends on how you lay out your terms and conditions.
Hire a Debt Collector Company
If contacting a lawyer is still too much for you, yet they’re still not responding to your notices, then maybe it’s time to hire a debt collector company. This type of company offers services in collecting and settling unpaid debts by your customers. They are established and legal companies that you can trust.
Moreover, the people working in debt are trained professionals in line with debt collection. Also, debt collector companies operate within the limits of the law. So, you can be at ease while trying to continue working at your company.
Additionally, all the transactions made by the debt collector related to debt collection are recorded in a log book. This is to update you on the transaction and inform you how they’re doing. Also, keeping a record book will help you keep valid evidence that your customer is deliberately ignoring your notices.
Present Adjustment for Invoice Schedule
Now, there can be reasons why your customers couldn’t pay their dues. Though late, one could be struggling to pay for some reason. It might be helpful if you ask them if you need to adjust the invoicing schedule for them. This would be beneficial for you too. There would be instances where some people would prefer to pay in a series of invoices than charge them for a single sum a month.
When planning this with your customer, it would help if you make it feel collaborative and not push a deal on them. Let them suggest when would be the best time for them and improve your trustworthy relationship with your customers.
Takeaway
Business owners must do everything within their power to protect their business. It’s only natural that you must prepare things that would help your company. Figure out the best solution by considering all the risks you may come across later, and you can use this list as a guide on how to recover the debts. It would be best to start planning now as soon as possible.
