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In this episode of the Sage Advice Podcast, “Business management as a key to success,” Joan Boluda talks to us about something frustrating but common and that you have to know how to manage: unpaid invoices .
By applying the right techniques, you will find it easier to minimize the damage that late payments and defaults can cause to your accounts.
Not all unpaid invoices are due to your debtor experiencing a lack of liquidity or solvency.
Review all documentation
The first thing to do is to keep calm and be polite. You need to make sure that there is a real delay. It is not so unusual that you think you were going to get czech republic email list paid on a certain date, but then you realize details that you had overlooked.
Maybe you were warned that there could be a slight delay due to administrative issues. It could even be that you got the date wrong or that the client who hasn't paid you yet is another one. There could also be a banking error... In short, there can be many loose ends and it's best to have them all under control.
Therefore, the first recommendation is to keep all the documentation you can. It is not only important to have invoices, but also contracts, emails, instant messages…
Even when you have a telephone conversation that is relevant to billing, it is not a bad idea to send a confirmation email . In it, you will indicate that what was discussed is summarized and you will give the other party an opportunity to rectify or clarify some aspect.
It is also important to have a global view of the non-compliant client. Look at their history with you. It may be a one-off problem for an exemplary client. However, if it is a very repeated behavior, you will have to sit down at the table and analyze the possibilities to redirect the relationship. See if you can do without this relationship or if it is feasible to ask for new conditions or guarantees.
Communication is key
Once you are clear about what you are going to claim, it is advisable to give the dialogue several opportunities. It is usually more profitable to wait a little and collect from a satisfied client, than to have to go to court to collect an amount from someone who will never do business with you again.
The scheme could include a couple of emails, one or two phone calls, a regular letter and, if necessary, some formal communication. This will cover several objectives:
Reminder of the delay.
Confirmation that the client is aware.
Negotiation of the conditions for a new payment term.
Announcement of the initiation of legal action if necessary.
You can also rely on the services of specialized payment agencies . In any case, don't be blinded by the what, but also think about the how. In other words, it's not all about collecting, the procedures are also important. Normally, what you want to project is seriousness and formality.
How to mediate to collect unpaid invoices
Another alternative is mediation . This is very interesting when non-payment is due to discrepancies. You can also resort to arbitration, in which a third party will decide what is appropriate.
In some cases, you may have to go to court. But keep in mind that there are several ways to collect a debt depending on the circumstances, not only of the credit, but also of the debtor.
The worst case scenario is usually when your debtor does not pay you because he cannot and, in addition, he has many other creditors. In this case, he will be forced into bankruptcy and a more or less complex procedure will have to be followed.
So, the first thing you need to understand is that you may not get your full debt. Also, keep in mind that there are creditors with different kinds of privileges, including workers, the Treasury, Social Security or those who have a guarantee.
The most common outcome is that you manage to collect part of your debt, but you have to wait for some time. This delay can be due to the need to complete phases of the procedure or to an agreement that has been reached to facilitate payment.
Fortunately, not all unpaid bills are due to your debtor's lack of liquidity or solvency. If he is able to pay, you can pursue other legal avenues.
