If there’s one big problem that every business on the planet faces, it’s unpaid invoices. In Australia alone, millions of small businesses always deal with clients who refuse to pay up. According to government surveys, slow or late payments are the biggest challenges that every company encounters. 

Invoices that are not paid on time can result in poor cash flow and financial losses that small companies cannot afford to experience.

In this piece, we’re spilling some little-known secrets in recovering the unpaid invoices or the debts of your clients to save your business from the brink of great financial loss or, worse, bankruptcy.

  1. Systematic collection process is the key

Most businesses, especially the ones that are just new in the industry, often worry about when they should ask their clients about their late payments or how often they must remind them. The thing is it shouldn’t be this way.

Don’t ever think that you’re overly demanding if you remind your clients or customers who refuse to pay up. After all, you’re just doing business and it’s your job to keep your company’s cash flow in a good state.

Keep in mind that your cash flow is the heart and soul of your company’s operations. And the best way to recover debts and unpaid invoices is to have a fool-proof collection system.

This collection system should lay out how much should be incurred for unpaid accounts, when should the debt be paid, and how often should you follow up with your clients.

Make sure that once you’ve set this up, your team and the customers or clients are oriented about this system so you’re both on the same page.

We also suggest that you set up an automated follow-up system to ping your clients whenever they need to pay their dues. Because, sometimes, clients tend to forget things and a little reminder can make a difference.

Usually, you can follow up in 7-14 days to see whether they’ve already paid.

  1. If emails don’t work, make the call

Some clients simply don’t want to comply with their contractual obligations. Yep, they exist. And there are a lot of factors why they can’t pay up. But whatever the reasons are, you can’t let these unpaid invoices impede your cash flow.

So if traditional mails and a barrage of emails don’t work, it’s time to grab the ever-reliable phones and ring them up before their debts pile up.

But before jumping on a call with your clients or customers, make sure that you know your facts and figures first. Knowing these things will help you explain their payment issues confidently. Makes sure that you have a copy of these details within reach:

  • Invoice number
  • The exact amount of the outstanding balance
  • Payment due date
  • Number and dates of reminders and follow up notices you sent them
  • If you have multiple contracts with the client, make sure to bring them up, too.

These are only some of the techniques that you can employ to recover the debts of your clients. A fool-proof collection system will also help you settle some of the problematic accounts that have been hurting your company financial-wise.

But like they always say, prevention is better than cure. For you to avoid these kinds of situations, the best thing to do is to avoid problematic clients in the first place. Before signing a deal with someone, make sure that you’ve done a thorough background check with the help of credit reporting services.

These credit checks will save you a lot of trouble, time, and money. That’s because you’d be able to identify who among your potential clients has a history of not paying up and weed out the bad ones from the good ones.