Notice number 3 has been sent and still no payment? What to do with unpaid invoices.
Notice number 3 has been sent and still no payment? What to do with unpaid invoices.
Every company experiences it from time to time, a customer who does not pay or react to invoices and reminders, but what do you do with these unpaid invoices? In the following article, we will go through the possible tools that can be used to monitor and follow up on payments so that outstanding invoices are still paid.
An unpaid invoice. What now?
As you know, in most companies the main focus is on the customer. The saying “customer is king” will therefore not sound unfamiliar to you. As a company, you often do everything in your power to meet the needs of your customers, but what if they do not pay? Not a pleasant situation, of course. Fortunately, there are various ways of solving or even preventing this to a certain extent.
Start with prevention and protect yourself from outstanding invoices.
Have you given your terms and conditions a thought?
If you regularly have problems with unpaid invoices, it is best to go over your general terms and conditions again and add a few things if they are not already there. Here are some examples of measures you can include in your terms and conditions to combat defaulters.
- The expected default interest and any collection letter fees if payment is not made on time.
- A retention of title clause that ensures that you remain the owner of the delivered goods until the full invoice is paid.
- It is also best to include a section on due date in which you point out that in the event of non-payment, all other invoices become due and payable, even if they have not yet become due.
Use a pro forma invoice or ask for an advance payment.
It may seem obvious, but you can prevent a large part of your unpaid invoices by being proactive. For example, you can have customers pay in advance by means of a pro forma invoice. This is not a possible solution for every company as, for example, in the services sector, the total cost is only really determined afterwards. In this case, you can ask for an advance so that part of your invoice is already covered.
What is a pro forma? Pro forma is Latin and it literally translates to “for the form”. It is a provisional invoice with information about the products or services that you, as a company, will provide. Such an invoice is often sent to ask the customer for an advance payment. After payment is received, the customer will receive a normal invoice with the message “Amount paid on – date payment was received-“.
Take a look at the financial ratios of your business relations.
By looking at the financial and economic situation of your customers, you will quickly determine whether they will be able to meet payments in both the short and long term. When, as a company, you have payment problems, it is logical that you will first pay the invoices for the most urgent debts, such as those of the utilities. If you want to quickly consult the financial situation of a company, Trends Top offers clear dashboards and handy tools.
Would you rather get started yourself?
Then be sure to read the following articles with additional information on the financial analysis.
Unable to prevent unpaid invoices through prevention? What now?
Not everything can be avoided through prevention, but what is the next step? Every company has its own way of dealing with this. Some provide the customers with a payment reminder at the next contact or a reminder by post or e-mail after the expiry date of the initial invoice. A first friendly reminder so to speak. It is always possible that they have accidentally lost track of the invoice.
If the friendly reminders have not helped, the next step is a final notice (legal notice of default). It is best to send this by registered mail with a notification of receipt and a copy of any documentation relating to the unpaid invoice. It is best to include a deadline and the statement that if you do not receive payment, you will hand the file over to a collection agency, bailiff or lawyer, with the customer paying for the associated costs.
You can also always sit down with the customer to draw up an instalment plan. Make sure that you write everything down clearly and have it signed by the customer.
If the invoice still remains unpaid, you can send a second notice of default. If this does not change the situation, there is only one option left and that is a procedure before the Commercial Court of the jurisdiction that you have mentioned in your general terms and conditions. If you win this procedure, a bailiff can use the judgement to force the customer to pay the invoice. However, this procedure is lengthy and has a cost that you would rather avoid.
Would you like to have accessible information about payment experiences, creditworthiness and possible legal incidents in order to avoid financial risks? This is where Trends Pro comes in. Thanks to the systematic processing of official publications, we can keep you up to date on a daily basis with developments in Belgian companies in an easy-to-understand manner.