Don’t get Burnt by Unpaid Invoices
With Bonfires, smoke and fireworks around this season, don’t get burnt by unpaid invoices!
For most SME’s, debt means the end of the business. That should not be the case for you.
So, you did the work, sent your invoice to your client with the standard 30-day payment terms and it’s now overdue. It’s a widespread complaint for most small businesses, dealing with clients who don’t pay on time.
It’s one of the major hurdles of SME’s to overcome, if they are not prepared to tackle the unpaid invoices and are unaware of their options.
Plenty of scenarios have been heard where a SME completes the work and then they are not paid timely. Oftentimes, the small (usually newly established) business will have invested time, energy and funds to complete the work. More than one job like this and the SME’s cash flow can cripple and quite possibly force them to close their doors before they are firmly open.
Don’t become a member of burned invoices club!
Many Business owners are so pre-occupied in getting the company off the ground that they are forgetting to invoice for their services. These business owners are clearly not doing themselves any favours, particularly when the business is newly established and cash flow is vital for the survival of the business. Good cash management and prompt invoicing in the first step in ensuring the new business has a chance to flourish.
The payment terms are not set in stone. Although most companies use to the standard 30 day terms, it might not be the best option for every business. Don’t be afraid to negotiate and implement terms that work specifically for your business. Have a set date established for when a payment is due. Your clients will want to know when their bills are unpaid, just as much as your business wants to have payments coming in on time. Having set terms will benefit both sides of the relationship.
Burning the bridges
Whilst generally small business owners are reluctant to recover their unpaid invoices purely with intent to maintain a good relationship with the clients, it is vital to keep in mind that a business cannot survive without a regular cash flow. Remember you can take a professional approach without being forceful. It’s a contractual relationship. The client engaged you to supply your services and agreed to pay you a certain amount by a certain date. If you agreed all those things in advance, your invoice is reasonably priced, sent in a timely fashion and accurately reflect the services completed, you should expect to be paid promptly.
There is no smoke without fire
The reasons for SME’s writing off their unpaid invoices might vary however most commonly it happens because of the debtor’s incapacity to pay the debts. SMEs should always watch out for warning signs that your client might be in financial trouble. Signs such as inconsistent or late payments, falling profits, unsatisfied Judgments might prompt SME to explore their legal options.
Explore Legal avenues
If you have tried everything to collect the overdue payment but your attempts have been unsuccessful, it may be necessary to engage a firm of specialised Debt Recovery Solicitors. A Solicitor’s letter requesting payment within a certain date is usually sufficient to prompt even the late payers into action. The letter will usually outline that legal action is going to be commenced and the statutory late payment charge is added, which is between £70 and £100, along with interest on the debt in accordance with the Late Payment of Commercial Debts Act. Most solicitors will be happy to provide you with basic advice for free.
Meet The Head Of Department
Debt Recovery Paralegal
Call 0113 200 9787 to speak to one of our solicitors.