To keep your business growing and thriving, it is important to ensure the invoices are cleared on time and keep the focus on the cash flow. However, we all know that the situation can not be ideal all the time. There are multiple reasons why the invoices go through the unpaid period for a very long time. Manage overdue invoices is an essential task to survive in the business. This has been quite challenging for businesses, especially in the time of covid-19, several companies struggled with the challenge of overdue invoices.
In this blog, we have covered a basic understanding of managing overdue invoices and focused on the important features to ensure the invoices are paid on time. This brings our attention to focus on the terms and conditions of payments, ensuring that the invoices are sent to the right clients, active follow-up of the overdue invoices, and time management.
How to Manage Overdue Invoices
The key point here is to focus on bookkeeping which will make a difference in getting the overdue invoices as early as possible. Everyday bookkeeping involves the following duties:
- Bank Reconciliation
- Supplier Payment
- Recording customers
- Posting Bank Payments
- Accounting for cash expenses
- Posting the purchase invoices
- Sending the sales invoices to the clients
Furthermore, we have explained the most common and smart ways that will help you to manage your overdue invoices.
Payment Terms and Conditions
The payment terms and conditions are important to set up before you plan to make the selling of your products and services. It is suggested to communicate the payment terms to your customers and then raise or issue the invoices to avoid overdue payments. The professionals often suggest communicating with their clients in the following ways:
- Before agreeing on the contract of payment, check the details of the company that they are dealing with.
- Search for the status of company directors from the companies house.
- Ensure that the directors were not associated with the companies that are now dissolved.
Moreover, the talk about setting up the terms and conditions for the payment, generally requires that the invoices must be cleared within a month. The late payments make you suffer penalties and fines according to UK law. Debt recovery costs can also be part of penalties, however, this should already be a part of the terms of payment to discuss with clients.
Time Management in Sending Invoices
After you are done selling your products and services, you must focus on sending the invoice timely. This will bring the payments on time because the purchase of products is fresh in the customer’s mind. The experts suggest sending the invoices immediately and not after days when the memory of a new purchase fades away from the mind of customers. If they still do not pay, you should keep the follow-up vigilantly and send them reminders.
The accounting software can be a great help with invoicing payments here. Also, focus on adding the required details like your bank details so that the client does not have to look for this basic information and sends the money quickly.
Vigilant Follow up of Overdue Invoices
In case the due date of payment has passed and the customer has not cleared the payment, do not feel reluctant to give reminders about the payment by quickly getting in touch with them. The quick and vigilant you will do the follow-up, the sooner you will receive the payments. A polite reminder is all that you need to do immediately to achieve the payments promptly.
In case of delayed payments, polite reminders are a professional way to get the payments cleared swiftly. However, if you bring the threatening factor involved in your reminders which can be about the fine charged or other penalties, this will not cement your relationship with customers. This is not a very good idea to follow. You should keep the communication channels open for them. The best suggestion is to send a quick and friendly reminder through email or a phone call.
Ensure to Send the Invoices to the Right Client
There is confusion about having a specific contact in your company and sending them the invoice without realising that he is not the right person who deals with invoices. This makes the payments deal as well. You need to have your search about who is the right person to send the invoices to and contact them for the follow-up as well. This will get the payments cleared on time as well.
In case you rely on your specific contact to forward the invoices to you, you know they will not take it as a responsibility. We all know how forgetful we can become in the rush of work. Always follow the idea of making the payment process as easier as possible for your clients and this will get you to swift payments.
Reach out to our guys for a quick call if you seek instant help with your overdue invoices. We will love to hear you out and find suitable solutions.
The Bottom Line
Now that you have gathered a fair amount of information about managing overdue invoices, we can bring the discussion towards wrapping up. Finally, we can sum up by saying that handling overdue invoices is a tricky process. However, if you tend to follow the smart ways to deal with the client like sending immediate humble reminders or making the payment process easier for them can help to get payments on time. We hope these few minutes of reading will help you to manage your overdue invoices more efficiently.
Disclaimer: The information about managing overdue invoices provided in this blog including text and graphics is general in nature. It does not intend to disregard any of the professional advice.