Chasing Debt

What To Do When You Have An Outstanding Invoice

Cash flow is a key component in the success of any business. Without it, you will soon find yourself in financial hot water.

If you don’t have funds coming into your accounts regularly, then you may not have money available to pay your bills or wages when they are due.

One of the biggest threats to good cash flow is overdue invoices.

So, what can you do if you have an outstanding invoice? Follow these simple steps to recover the funds and get paid!

Send Invoices On Time

One of the most important aspects of getting paid on time is ensuring that you send your invoices on time! Send the invoice as soon as the right milestones are hit, or the job is complete.

If you wait too long, then people may forget about the work you did for them. They will have expected an invoice right away. Delaying makes it harder to get paid as they may have unintentionally spent the funds. These delays threaten your positive cash flow.

By sending the invoices in a timely manner, you can be sure the work is fresh in the minds of your clients and gives you the best chance of getting paid on time.

Set Up Automated Reminders

If you use online accounting software like Xero, then you will have the facility to set up automated invoice reminders. Instead of worrying about which invoices are due when the system takes care of it for you.

As soon as an invoice hits an overdue milestone, the software will generate an email reminding your client that their payment is due. You can set the reminders to go out at any frequency, even a day before the invoice is due.

Get In Touch

People are busy. In all the action of the week, invoices can easily get forgotten. They get filed away or put to the bottom of the pile to ‘deal with later’. It isn’t that they mean to forget about your invoice, sometimes it simply slips their mind that it is due for payment.

Shooting them a quick email or picking up the phone and giving them a call could be the gentle reminder they need to get that invoice paid.

Have Your Bookkeeper Get In Touch

If your previous methods of collection haven’t worked, then you can involve an outside source to get things moving. This is a professional approach that will help you to recover your money without tarnishing the relationship you have with your clients.

Coming from an official associate of your business, it removes the emotion from the process and applies the gentle pressure to encourage payment.

Include Penalty Fees

In order to do this, it must state in your Terms and Conditions that penalty fees will be applied to any payments that are overdue by a certain number of days. If you don’t have this clause in your Ts and Cs, now is the time to contact a legal professional and add it in.

For most people, the thought of paying more than they have to is often enough of a deterrent of getting payment into your account or at least spark a discussion about alternative payment options. Clearly state on your invoice that penalty payments will be applied from XX date and what the amount will be.

On the flip side, you could also give an incentive to pay early by offering a small discount to prompt payers.

Advice Of Collections Process

If all your other methods of collection have failed, then you can go down the formal process of debt recovery. Again, it should state in your Terms and Conditions that any outstanding amounts will be sent to a debt collection agency XX days after the due date.

The debt collection agency will collect the outstanding amount on your behalf. Be mindful that there are often fees involved with this process, so exhaust all other options first. It is also a major deterrent for clients to want to work with you again if you have referred them to a debt agency, so only use this option as a last resort.

If you find that you are always chasing outstanding invoices, it might be time to evaluate your invoicing process. Here at Accountants Plus, we can help you come up with an efficient system that keeps your cash flow steady and overdue payments to a minimum.

Get in touch with us today for any Accounting queries.

Spring Clean your Finances

 

When winter comes, often we start letting things get swept under the rug. With finances, this can cause long term issues – so now it’s time to get yourself out from under all your snuggly winter blankets and out into the new spring sunshine, so you can get that money flowing in more than out again!

We have some great tips for getting the basics back up and running smoothly:

  1. Re-evaluate the savings and spending goals you set at the beginning of the year
    Did you decide your business was going to reduce spending on unnecessary items this year? It’s not too late to make a dent in your spending now – resize your goals and make them achievable in the time you have left in the year.
  2. Make deals with your providers
    If you run a business, it’s likely you are paying subscription fees for internet, business phones, and perhaps even stationery companies. Maybe it’s time for a quick call around to your providers – see if you can get a better deal with them. Internet and phone providers will often give you a better deal if you combine them together. Mobile plans are also changeable – even if you can’t get your plan for a more reasonable price, perhaps they can give you more bang for your buck.
  3. Take another look at 2015 spending so far
    Go back through your accounts and separate it into different cost centres. How much of your spending is occurring where you could save money? Where can you cut back? What have you under-budgeted for?
  4. Check your payables
    Check your payables – are there bills lying around that perhaps you have been avoiding, or have even forgotten about? It’s time to dig them out, and decide how you want to proceed; whether it’s in one big lump or if you need to spread out those payments – and if you do, how you will propose that to the vendor.
  5. Have an office spring clean
    While you spring clean the accounts, it’s also a great time to think about spring cleaning your office. Maybe you can get your business some cash if you discover you have actually got a perfectly useful printer sitting in a cupboard somewhere, or a spare desk and chair that really is taking up more room than it is worth.

Do you have what it takes to be an entrepreneur?

Some very interesting points here about what it takes to be an entrepreneur!
Some of you may be thinking about taking the plunge to start your own business; read up about the realities of it – especially the financial management side of things.
This is where we can help!
Call us on 04 576 2300 and take the first step towards entrepreneurship.

Budget 2015 Report

A Bit Bamboozled by the Budget?

CCH have prepared an awesome, easy to understand summary report on the changes. Visit their website HERE to check it out.

They provide excellent explanations and will help everything make sense for you.