Small business owners and freelancers know all about the topic of this week's blog post - chasing unpaid invoices! Unfortunately, there are always those clients who fail to pay their bill timeously (or perhaps pay it at all), despite the fact that you held up your end of the bargain - delivering your product or service on time, to specification and with a smile! Frustrating, for sure, but more than that bad debtors can sink a small business faster than you can say pay me


Show me the money!

Although it's the client who's at fault, it's surprising how many small business owners feel that they do not have the right to take a stand against late payers. But can you imagine your bank feeling too small or anxious to call you if you reneged on your contract with them and missed a car or mortgage payment? You get the picture - not only do you deserve to be paid for a job well done, but you're actually legally entitled to it.  So hold your head up high and don't be afraid to get what's due to you. Here's how you can make collecting money for a project easier:

  1. Clearly state your Terms and Conditions of Payment on your rates card, quotes, invoices and statements to avoid confusion
  2. Always get an Order Number before you begin the job
  3. As soon as the job's complete, send your invoice.
  4. Make sure your invoice has all the correct information - your client's VAT number (if applicable), your postal address and that of the client, details of the job and the date. Quote the order number on the invoice.
  5. Keep tabs on your debtors book and bank account to ensure that you know who is and isn't paying at all times
  6. One week after payment is due on an invoice, send out a cordial email reminder. Re-attach the invoice (it's amazing how many clients claim never to have received it the first time!)
  7. Three days after that, pick up the phone and call your client - politely but firmly ask when you can expect payment 
  8. If payment still hasn't been received on the date given to you by your client, send a more firmly worded reminder. If they don't get back to you, follow this up with another phone call. Don't be afraid to ramp up your request for payment by getting in touch with someone higher up the chain of command.
  9. Still no luck? It's time to break out the big guns. Let your client know that you won't be able to take on any more work for them until their outstanding debt has been cleared. Send out a final letter of demand for payment and advise your client that you will be forced to refer the matter to your attorney if you don't receive payment in seven days. 
  10. As a matter of course, do also send out a statement to every client at the end of every month - this will detail what's been paid, what's outstanding and how many days' overdue it is. Re-attach any original outstanding invoices as well. This will help ensure that you and your clients know the exact state of their account. 
Remember:
  • It's the client who should be ashamed of not paying their bill, not you for asking for your money!
  • The squeaky wheel is the one which gets oiled - in other words, making more noise than other service providers will prompt your client to pay you first
  • As a businessperson themselves, the client is perfectly aware of the rules of business - don't let them take advantage of you!