by Conrad Ford, Managing Director of Check Business
Small business owners and entrepreneurs are particularly prone to seeing their invoices go unpaid for a number of interconnected reasons. Firstly, the clients involved often feel as if they can quite easily refuse to pay your invoice because they doubt whether you have the money or the inclination to chase them for payment through the courts or in any other way.
Secondly, that perception all too often turns out to be accurate because small business operators are obliged by necessity to devote as much time and resources as possible to dealing with day-to-day issues and existing clients.
However, there is plenty that you can do as a small company director, a self-employed operator or an entrepreneur, if your invoices are going unpaid. Here are some ideas on the subject:
1. Keep at it.
It can be tempting to write off the amounts of money involved with an invoice that has been left outstanding for weeks or months in order to focus on other more pressing matters. However, if you stick at it and refuse to take unresponsiveness or excuses for an answer then there’s a good chance you will eventually get the result you’re after.
2. Have a standard strategy.
In the context of chasing up late invoice payments, an ability not to overthink the dynamics of a situation and to act in accordance with a pre-defined strategy can be a major advantage. There can be any number of reasons why a client might not have paid your invoice on time but it is better as the service provider to have just one method for chasing up on the issue.
3. Clarify your terms and intentions.
The best way to ensure that you receive payment on any invoices you send to clients is to issue them as promptly as possible. Invoicing immediately gets the process started swiftly but it also means your clients understand your terms while your work is still fresh in their minds. If, however, for any reason you have not received payment after a given period of time then you should reemphasize your initial terms and make clear at what point you intend to make the issue a legal matter.
4. Know the law and how to use it.
No small company wants to become embroiled in any kind of legal wrangling around a single invoice going unpaid by a former client. However, by knowing your rights and what legal options are available to you, you can use the threat of a particular course of action to your advantage. Often, the threat of legal action will be enough to persuade your clients that they ought to prioritise your payments over others if they’re having financial difficulties of their own.
5. Consider using invoice finance.
When invoices of any size or significance go unpaid for a lengthy period of time it can cause a good deal of stress and frustration for small companies. But when the invoices are relatively large in scale and receiving the money is vitally important to your operation and its cash flow then it can be worth considering other options. Invoice financing allows companies to sell the rights to money they are due to be paid by clients for an upfront amount and a specified fee. All of which might not make for an ideal scenario but it can amount to a preferable option during difficult moments and when your company needs a cash injection quickly.
Conrad Ford is Managing Director of Check Business, a technology start-up that helps SMEs solve the key business challenges of: getting paid, finding new customers, and raising finance. Conrad has a Masters from Cambridge University. You can find more information on his website or follow him on Twitter.