Chasing overdue invoice payments can be a hassle. Not only do you have to make sure that you collect invoices on time, but you also need to be aware of any late payment penalties or interest charges that might apply.
If an invoice payment exceeds the terms of the invoice, what should you do? Not only have you lost out on the money that is owed to you, but now you have to worry about debt collectors and other legal issues.
In this blog post, we will discuss some of your options and provide some tips for dealing with overdue invoices and strategies for avoiding this situation in the future.
What Does It Mean When An Invoice Exceeds Terms?
An invoice exceeds terms when the customer doesn’t pay within the specified time frame. This time frame is what you set out in your invoices, typically it can be any time from 30 days to 120 days. If you invoice a customer and they don’t pay within the specified time frame, then the invoice is said to have exceeded terms. This can happen for a number of reasons, such as:
– The customer is having financial difficulties and can’t make the payment on time.
– There was an issue with the product or service that was delivered, and the customer is waiting for a resolution.
– The invoice was sent to the wrong address or the customer didn’t receive it.
– The customer is disputing the charges.
How Long Should I Wait To Chase Overdue Invoices?
It’s important to chase up on overdue invoices as soon as possible. The longer you wait, the harder it will be to get paid.
There are a few different options for chasing up overdue invoices:
– Send a reminder email or letter. This is a gentle reminder that the invoice is due and outlines the consequences of late payment.
– Make a phone call. This is a more direct way to chase up an invoice and can be effective in getting a response from the customer.
– Use a debt collection agency. If you are unable to get in contact with the customer or they are refusing to pay, you can use a debt collection
What Are The Consequences Of An Invoice Exceeding Terms?
There are a few consequences that you may face if an invoice exceeds terms:
– Your customer may be placed on a credit hold, which means they can’t purchase anything else from you until the invoice is paid.
– You may have to hire a debt collection agency to collect the invoice payment.
– The invoice may be reported to the credit bureaus, which can damage your customer’s credit score.
– You may take legal action against the customer.
What Can You Do To Avoid An Invoice Exceeding Terms?
There are a few things that you can do to avoid an invoice exceeding terms:
– Clearly state the invoice payment terms on the invoice.
– Send a reminder to the customer a few days before the invoice is due.
– Follow up with the customer after the invoice is due.
– Consider offering a discount for early payment.
– Use automatic payments.
– Include interest provisions in your contract. Thanks to the Late Payment of Commercial Debts (Interest) Act 1998, you may do this as permitted by law.
This legislation allows you to claim an interest rate of the current Base Rate plus 8% on overdue bills. This can act as a deterrent however the good news is even if it is not detailed in your contract terms you can still charge it.
Discover more in our ‘How To Reduce The Stress Of Late Payments’ blog.
Don’t Wait To Get Paid From Overdue Invoices
An invoice exceeding terms can be a hassle, but there are ways to avoid it. By clearly stating the invoice payment terms, sending reminders, and following up with customers, you can help ensure that invoices are paid on time. In addition, you may also want to consider offering a discount for early payment or using automatic payments.
Remember, the longer you wait, the harder it is to get payment from overdue invoices. If you’re struggling to get paid, It is time to take action and get your debtors to pay up. Drop us a line and we can help you get paid!
By engaging with My Debt Recovery, we can take the stress away. Allowing you to refocus your attention back on what you do best, growing your business.