If you’re looking for solutions for past-due invoices for your business, you’re on the right track. Late payments are lost income to your business that can disrupt your company’s cash flow. And past-due invoices are just downright frustrating because you have to devote time and resources to pursuing payment. 

Why Past Due Invoices Are a Problem

One survey by Fundbox revealed that 64% of SMBs have had to deal with issues related to past-due invoices. Of the companies that had problems with past-due invoices, 79% said those issues resulted in them being unable to pay themselves, and over 20% said they had to either stop marketing their business or put off hiring new employees because of outstanding payments. 

How to Resolve Past-Due Invoices

Most invoices have terms attached to them, stating when and how payment is expected. If your customers or vendors aren’t paying on time, here are some tips to resolve past-due invoices.

1. Set Clear Terms

Establish your terms at the beginning of the relationship. All contracts should clearly state if payment is due on delivery, net 30, or something else. If you failed to do this, renegotiate now. 

2. Send a Friendly Reminder

If your client hasn’t paid their bill in accordance with your terms, send them a friendly reminder note via email. Starting casual is the best approach. 

3. Institute a Late Payment Fee

You can motivate clients to pay on time by instituting a late fee and even giving a discount for early payment. Whichever option you choose, make your terms clear on the invoice and enforce them. 

4. Send an Overdue Invoice

If your invoice hasn’t been paid after a friendly reminder, send another invoice marked as “past-due” or “overdue” in red or some bold font. 

5. Make a Phone Call

At this point, it’s time to reach out with a phone call to find out what’s going on with your unpaid bill. Sometimes, hearing your voice will be all it takes to get your client to take some action. 

6. Negotiate Partial Payment

Businesses can fall on hard times or face unexpected staffing shortages. If a client isn’t paying your invoice because they think they have to pay all of it, see if you can negotiate partial payment for now. 

7. Cut Off Your Services

Another approach to get the attention of non-paying clients is to stop providing services. After all, your business doesn’t work for free. 

8. Send a Certified Letter

If you are considering pursuing legal action to get your invoices paid, you should send a certified letter. The letter should reiterate what is due, when the due date was, and list your previous attempts to collect. 

9. Go to Court

Depending on the amount of the bill, you may wish to pursue legal action. You can generally take a customer to small claims court or get a lawyer to file suit for a larger bill. 

10. Hire a Debt Collector

Some small businesses also hire a debt collection company, which will take a percentage of what they collect and/or charge a fee for the service. 

Get Help With Small Business Bookkeeping and Accounting

Tracking and resolving past-due invoices can be a time-consuming task. As a small business, you have enough on your plate. Nolan Accounting Center specializes in forming strong and lasting partnerships with small businesses throughout Southeast Wisconsin. Our accountants and CPAs provide bookkeeping, accounting, payroll, and tax preparation services with a high level of customer service. Contact us today to learn more.