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How to chase an unpaid invoice

Chasing unpaid invoices is the most annoying job you will have to do in your business, and it could potentially waste a lot of your free time. Therefore, putting a system in place that will help you is paramount. 


Firstly, you need to get organised and know exactly who paid and who didn’t. Accounting software will let you send reminders to your customers if their invoice doesn’t get paid, and you will easily see who paid and who didn’t. 
You need to understand that chasing unpaid invoices isn’t rude. It’s part of a business. You have provided a service or product, and your client was happy. They waste your time and energy if they don’t pay you. You don’t have to feel bad for chasing payment. You’ve earned that money, and having a healthy cash flow is paramount to your business’s survival and success. 

However, it may be that your invoice didn’t get paid because your customer’s card has expired, and the direct debit payment couldn’t go through. Or perhaps because they were busy and simply forgot about your invoice. Whatever the reason, remember, you are representing your business.

Steps to chase late payments

Step 1 - Email your invoice again
Email them your invoice with a quick reminder telling them it’s overdue. I recommend doing this on the last day of your payment terms if you haven’t received payment. It could be as simple as:

Hi …..,
Please find attached invoice no ….

This invoice is now overdue for payment. We would appreciate it if you could settle at your earliest opportunity. 

Please don’t hesitate to contact us.

Kind regards

Step 2 - Email Statement of account
Email your client a Statement of account. It is a good practice to send your clients a Statement of account at the end of the month. It’s ideal if you have clients who order a lot from you and have several invoices a month. It is entirely possible; that they have missed your email, and when they go through your statement, they send you payment immediately.

Step 3 - Give them a call and send them a letter
Give your customer a polite call to chase payment. They are well aware of the invoice being still outstanding, but you need to speak to them to understand why wasn’t the payment sent yet.

In my experience, it’s one of the three things at this stage:
There is a problem with the service/ product
There is a problem with an invoice
They are experiencing cashflow problems

You will have to talk to them and see what can be done to resolve the situation. They may need some additional time to pay. Be polite, but make it clear that further services or products are on hold for a moment. 

Suppose they need additional time to pay, arrange a date with them so that you know when to expect payment and note it down. Then, if you don’t receive the payment, call them again to see what the problem is.

However, every now and then, you meet a turd, who refuses to talk to you, doesn’t answer your calls, or emails asking for payment. In that case, you need to write them an official letter asking them to pay within a specific time frame and informing them that you will be taking legal action. Always send a letter like this as Signed for to ensure it reaches them. It usually does the trick.

Step 4 - Legal Action 
If they still don’t pay or refuse to talk to you, you may need to engage County Court Judgement (CCJ). CCJ is a court order which will tell them to pay the debt they owe you. Having a CCJ against a company can adversely affect their credit rating for six years, and they will have to respond within 30 days.

Step 5 – Write off the invoice
It can happen that the company owing you money goes into liquidation, and you don’t get your money back. Generally, if you can’t contact the client, or they are unwilling to pay, and the dept has been unpaid for more than 90 days, the invoice would be written off as a bad debt. 


Get your money faster.
Making most of your payment terms will help you improve your cash flow. Think back to the way you invoice your customers. How quickly are you getting those payments through? 

If it’s instantly and most of your clients are on direct debit, that’s fantastic. You don’t have to worry about it. However, giving your customers 30 days to settle their obligations, but paying your own bills right away, may present you with cash flow problems because you would have money going out quicker than coming in. 

You always want to make sure it’s the other way round. Otherwise, you will have lots of sales and no money in your bank account. You can follow the link to improve your cash flow in another blog or book an appointment to work with me, and I'll take the stress away for you.
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