Unpaid invoices are the cause of a very large number of failures of small or medium-sized companies. To avoid this, it is essential to take precautions downstream and to react quickly in case of late payment. This article will help you learn how to protect yourself from unpaid invoices.
Know Your Customers Well
The first step is to get to know your customers and/or contact person better (who are they ? what is their role in the company ?) and to fully understand your customer's billing process (who should the invoice be sent to ? what information should be sent to get paid? who is in charge of payment ?). You can, however, use software for accounts receivable to protect against unpaid invoices.
Be rigorous in managing your accounts receivable
To be able to develop your business serenely, you must be very rigorous in managing your accounting and more specifically your accounts receivable. It is generally advisable to keep your accounting up to date, to keep and organize your accounting and administrative documents by customer, to follow up on your customers' payments, to act quickly in case of unpaid invoices, to keep cash on hand to cover delays and unpaid invoices, to ask for deposits on orders and to refuse payments only at the end of the order, especially when large sums are involved.
Provide terms and conditions
Your professional services must absolutely be framed by carefully drafted contractual documents. Moreover, you should never agree to work without a contract. Before starting any contractual relationship, it is therefore essential:
To have general conditions established : they must notably foresee the payment terms within which your invoices will have to be settled, as well as the penalties in case of delay.
Have your customer sign a purchase order or a quotation to establish his consent.
To issue an invoice once the service is completed : it must contain all the mandatory legal mentions.