4 Key Strategies when dealing with unpaid invoices
Updated: Nov 25, 2020
Have unpaid invoices?
The average amount of time it takes for an invoice to be paid in Australia is 26.4 days overdue and more than 40% of invoices are paid late. The number of days can significantly be reduced if businesses adapt a strategic approach in tackling this problem effectively.
Collect your unpaid invoices
We have gathered four strategic steps that a business may utilise in executing a solid approach in reducing the number of unpaid invoices.
1.) Understand your clients’ financial circumstances first:
Most clients, whether it is a business or a consumer, do experience unforeseen circumstances that can impact their financial state to commit to their unpaid invoices on time.
In order to distinguish their circumstances, a simple way of communicating with the client is through a verbal discussion via phone call. Through the conversation, be polite and understanding of your clients’ financial situations. It is critical to notate the discussion for record keeping and legal purposes should there be an escalation in the future.
2.) Offer alternatives based on your client’s financial circumstances:
Paying an invoice in full may sometimes create a disruption to your client’s budget and thus fail to commit to certain living standards. In that case, you may wish to construct an arrangement plan that your client can comfortably commit to for the time being until their financial circumstances are eased. It is recommended that a payment plan should not exceed a period of ten weeks. However, this falls back depending on the severity of your client’s situation. That said, if a client cannot commit to a Ten week payment plan, it is recommended that you ask for further documents to outline the debtors’ financial circumstances, such as bank statements, other bills, living conditions etc.
3.) Advise your client of penalty fees/settlements:
It is without a doubt that an unpaid invoices do indeed cause businesses to suffer losses. Therefore, penalty fees can be applied to the invoice subject that your terms and conditions are well interpreted to your clients before and after the commencement of business interaction with them.
In the case where your client is perhaps finding it difficult to commit to the full payment, provide them with a settlement offer subjected to strict conditions that they must pay within seven days. This tactic works effectively as it indicates your understanding of your clients current financial circumstances.
4.) Seek a collection agency to collect your unpaid invoices:
There are over thousands of debt collection agencies currently operating within Australia that can collect your unpaid invoices. It is critical to choose an agency that operates predominantly within your industry for rapid results. This ensures that the agency is well familiar with how your industry operates and can use that to their potentials in settling and negotiating your unpaid invoices.
It is also essential to find a collection agency that operates in a professional matter that can maintain client reputation for your business. Most businesses are afraid to seek a collection agency on the basis that their reputation may be tarnished with their clients as a result of their pressuring tactics to clear the unpaid invoice.
At Australian National Recoveries we make your unpaid invoices our priority, we strive for effective results whilst maintaining client reputation to the fullest. If you are experiencing issues with unpaid invoices please feel free to reach us!
1300 793 187 | Contact@anrservices.com.au