Money from invoices gets invested back into your business, so your company can grow and thrive. That is why unpaid invoices are so frustrating. You deserve compensation for the goods or services you provide. You also need the proper cash flow to ensure your business will continue to operate.
While you cannot prevent the hassle of unpaid invoices altogether, you can take certain steps to recoup money owed to you. Entrepreneur explains effective strategies to ensure invoices get paid.
Follow up as soon as possible
A brief, polite email is often sufficient in receiving unpaid funds. Send the email soon after the due date arrives to prevent the issue from getting out of hand. You do not need to make threats or use confrontational language. Just say you are checking in and wondering if there is anything you can do to help.
Give discounts for early payment
People love getting a deal, which is why discounts are a great motivator for early payment of invoices. Establish a certain time period, such as a week after invoicing, during which a client or customer will receive a percentage discount for paying the invoice in full. Not everyone will take you up on the offer, but those clients who do will appreciate the price reduction and reward you with loyalty.
Establish a penalty charge
Along with discounts, also establish a system of penalty charges for late payments. Like your discount system, establish a certain time period after which penalties will apply. Make sure clients and customers are well aware of penalty charges, so they take the proper steps to avoid them.
Properly vetting customers before doing business with them will also help avoid invoicing issues. If payment is still not received, consider legal action or arbitration to resolve the matter.