Unpaid invoice: Your debt collection options

An unpaid invoice is costly, no matter which way you look at it. Unpaid invoices cost you money, they cost you time and most importantly, they cost you your peace of mind!

Your business is your livelihood.  Your customers are vital to your business, which puts them front and centre in everything you do.  So how do you go about securing payment of unpaid invoices whilst maintaining that all important customer relationship?

One size does not fit all and it begins with your business priorities…let’s take a look at which debt collection options may be best for you and your business.

Should I chase the unpaid invoice myself?

Best practice says you should prompt your customer for payment yourself in the first instance.  But what do you do if your invoice is still unpaid after the first and second reminder?  It depends…

If you are a business owner or occupy a role within the organisation which could be influential in getting the debt paid, it is likely that you also play a key role in running the core business.

Consider the following:

  • Do I have the time to continue to chase for payment myself? Is it the best use of my time?
  • Am I comfortable and confident addressing the unpaid invoice with my customer? Am I best placed to do any negotiating?
  • Is it likely that further prompts from me will result in payment of the outstanding invoice?
  • Will it be less time consuming and will payment be received quicker by using a professional?

Your relationship with your customer

Chasing the debt yourself can be uncomfortable.  The conversation with your customer can be tricky and potentially damaging to the relationship if it is not handled with objectivity.  It could also take much longer to recover the debt.  Of course it depends on the relationship you have with your client.  Can you broach the subject with an authoritative confidence and remain objective?  Only you know that.

Your time and your cashflow

If the invoice remains unpaid, issuing legal proceedings yourself through the Small Claims Court can be labour intensive.  Making sure necessary protocol is followed along with other legal requirements can also be difficult to navigate.  It all adds to the time it may take to recover the overdue invoice.

Business needs must come first.  There are other options to chase payment – but you are the best person to run your core business.

You may be confident that chasing payment yourself is the right option for you, and for some it certainly is.  If you plan to try to recover the debt yourself, we can help you to be as successful as possible.  Read our top tips to recover overdue invoices.  The article also features tried and tested emails/letters.  And here’s more helpful information: Unpaid invoice: Your rights.

Need payment quickly and cost effectively?  Take 5 minutes to think about your other options…

Should I instruct a professional to chase my unpaid invoice?

Securing payment of the invoice is vital and maintaining a good customer relationship is often preferable. Working with a professional can help.  Most people immediately consider instructing a solicitor.  Another option to consider is working with a commercial debt recovery professional.

To help you make a more informed decision about how to secure payment of your unpaid invoice, we will consider both options.

A solicitor?

Instructing a solicitor to chase overdue invoices sends a clear, strong message to your customer about your intentions.  It puts them in no doubt that you are serious about recovering that unpaid invoice.  Coming from a position of authority it will likely focus your customer’s mind.  And with an in depth knowledge of the legal process, your customer will be less likely to ignore your intentions.

However, the process can be costly and long-winded.  The process usually follows the standard steps of a Letter Before Action quickly followed by legal action – litigation.  The charging structure is likely to be such that if the debt is not recovered, you will still be charged for the time the solicitor has spent working on your case.  And if your client has been less than helpful the costs may have risen quickly.

A commercial debt recovery professional?

A commercial debt recovery professional is another route to chasing payment and is well worth considering. There are a number of benefits:

The majority of debts are recovered pre-litigation

If the debt is not recovered pre-litigation, it does not cost you a penny

The service is tailored to your business needs and sensitive to your customer relationship

Litigation is a last resort

But where necessary, there is a choice of cost effective litigation services and enforcement options

Additional information and advice at no extra cost

Thorough understanding of their trade and up to date knowledge on sector developments, rules and regulations

CLICK HERE FOR A MORE DETAILED EXPLANATION OF THE BENEFITS OF WORKING WITH A DEBT RECOVERY AGENCY

Takeaway point:

The sooner you act on your unpaid invoice the more likely you are to get paid! 

We hope you have enjoyed this article.  If you would like to read about other issues which could affect your business, please visit www.colligant.com

FREE 30 minute consultation

For a limited time, we are offering a free 30 minute consultation to support you with advice or a second opinion.

Simply let us know who you are and how we can contact you.  We will do the rest...