The best way to stop trying to collect on so many unpaid invoices is to avoid them in the first place.

By on 13-11-2018

HOW TO CHASE AN UNPAID INVOICE?

The best way to stop trying to collect on so many unpaid invoices is to avoid them in the first place.

These four tips will help you get paid on time and in full more often:

 RESEARCH POTENTIAL CLIENTS BEFOREHAND

 Sometimes you won’t find out that a client won’t (or can’t) pay until it’s too late. To avoid unpaid invoices, look for these red flags up front:

• Do they mention having a limited budget?
• Are they a small company with limited resources?
• Do they question your rates?
• Are they disorganized from the start?

 Noticing these flags alone would have saved me from all of the clients who disappeared with unpaid invoices. In fact, just a quick Google search would have given me enough information to avoid most of them.
If you’re on the fence about accepting a client but need the income, here are a few things you can do to protect yourself:

• Collect at least 50 percent of your project fee up front – before you begin the project.
• Schedule milestone payments throughout the duration of the project.
• Consider working with them on a smaller (trial) project to make sure you can collect

 before moving on to bigger commitments.

If you’re able to do it, consider working only with established companies who have a good reputation for paying their freelancers on time and in full.
If you do run into a client who won’t pay – and you’ve already done the work – realize that you’re not alone. We all get burned at one time or another, but a little preparation up front can reduce your risk.

Which brings me to the next point…

 HAVE A CONTRACT

 Many freelancers let the word “contract” scare them away from protecting their time, energy, and creativity.Don’t let that happen to you! A contract doesn’t have to be scary, complex, or drawn up by a lawyer. In fact, you can create your own contract here.
Then, make sure your client acknowledges and signs your contract.
If they resist, consider it a “red flag” – you may have unpaid invoices from this client in the future. Try to get 100 percent of your fee upfront if you decide to work with the client anyhow.Also, keep in mind that a contract doesn’t guarantee you’ll be paid. However, it is a record that the client agreed to pay your fee. This will help substantially if you decide to go to small-claims court or hire a collection agency to recover the money that you’re owed.

 BE CLEAR ABOUT YOUR EXPECTATIONS

 You can avoid a lot of unpaid invoices, late payments, and clients who simply don’t pay by outlining your expectations up front.
Some things you should consider discussing are:

• Your payment terms. When do you expect payment: upon receipt of the completed project, within 7 days, 14 days?
• What happens if they don’t pay? Do you charge a late fee or send the unpaid invoice to a collection agency?
• What if they stop the project after work has begun?

Making set policies for these things – and requiring clients to acknowledge them by signing a contract – will do wonders for your cash flow.

 BE TIMELY

 Your terms may differ, but generally, once the project is completed – and both parties are satisfied – it’s time to turn in your invoice.The longer you wait, the longer you delay your payment. Plus, you decrease the chance that you’ll be paid at all.
By following the tips above, you’ll greatly reduce your client payment issues…
But what if you already have an unpaid invoice?

 STEPS FOR COLLECTING LATE OR UNPAID INVOICES

•  MAKE SURE YOU FOLLOWED PROCEDURE

 Before jumping to conclusions or emailing your client a nasty note, make sure you followed the correct procedures for getting paid.
For instance, double check that you sent the invoice and that your payment terms were clear. Also, make sure your payment address is correct and that your invoice is error-free.
How embarrassing would it be to gripe at a client for an unpaid invoice, only to discover that you never sent it or that your address was wrong?
This can – and does – happen. But it doesn’t have to happen to you!..

•  FOLLOW UP POLITELY

 Unpaid invoices sometimes slip through the cracks. Before getting angry, send a polite follow-up note to check in.Your client might have simply forgot. Or your request for payment could have ended up in their spam folder.
Many times a brief “Just checking in” email can get an unpaid invoice resolved.
At this point, you’ll want to avoid any “past due” remarks to ensure a good working relationship with the client moving forward (assuming their failure to pay was simply a mistake and it’s corrected promptly).

•  SEND A “PAST DUE” REMINDER

 If your initial, polite, follow-up email didn’t result in a paycheck, it’s time to escalate your efforts..Contact your client again to remind them of your unpaid invoice and your policies. Ideally you had them sign a contract, so now is a good time to mention that. If you also have late fees, state that those are now accumulating.
Be sure to keep all correspondence professional and polite – even if you’re frustrated and feeling ripped off. Threats or nasty behavior are unlikely to get your unpaid invoices revolved. Plus, unprofessional conduct can hurt your business in the long run.

•  FOLLOW UP … AGAIN

 How many times you follow up – and what you do next – will depend on your previously stated expectations.
For instance, if you consider an invoice to be “late” after 30 days, then you might want to try to follow up for 3-6 months before taking additional action.
Also, ideally your contract stated what you would do in the event of an unpaid invoice.
Maybe your policy is to send any unpaid invoices to a collection agency after six months. Or maybe you prefer to take unpaid invoices to small claims court.
Whatever your procedure – follow up with your client one more time to tell them your next step. Also, give them a date that they can pay by to avoid your next action.
In some situations, it might be necessary to draft and send a “demand letter.”
Note: Be sure to save ALL correspondence with the client. You might need it to help you collect on unpaid invoices later.

 MOVE ON …

 Remember that your time is precious.At a certain point, it may no longer be worth your time and energy to try to collect an unpaid invoice. Although it’s unfortunate, there may be times when it’s in your best interest to call it a loss and move on.
If the amount owed is significant, consider getting a third party – such as a collection agency – involved to help you collect what you’re owed.
Many collection agencies charge you only if they’re successful. Their fee is usually a percentage of what they collect.

 GET PAID WHAT YOU’RE OWED

 Dealing with unpaid invoices is frustrating, draining, and time-consuming. It’s hard to name a more unpleasant part of running a business.
You can’t ensure you’ll avoid them forever. But you can minimize your risk. The key? Getting proactive about protecting yourself.