Imagine, you have a company, and you recently finished a huge project for one of your clients. You send them the final invoice, and expecting that payment will be released within a couple of days. Then, months have passed, and the invoice remains unpaid.
You keep contacting them, send them emails multiple times, but still, you didn’t receive any penny. They just completely vanished like a bubble in the air. And now, you’re stuck with these unpaid bills.
Now, what actions you should take?
Remember, any unpaid bills can ruin a company so instead of losing a lot of money, prevent this from happening again by simply following these steps below.
- Conduct Credit and background checks
It’s always the best idea to perform a thorough background and credit checks on your potential customers and see if they are reliable and trustworthy enough.
Credit and background checks can give you tons of information on your customers, including:
- Criminal records
- Credit inquiries
- Identification verification
There are some services you can utilize to conduct credit and background checks. Also, it is advisable to hire a Debt Collectors from a collection agency to ensure that the potential customer thoroughly checks as well.
- Send invoice in advance
Sending invoices in advance is a wise move before giving them any services so that a customer won’t be shocked by the final invoice amount. You may use free apps that can create professional-looking invoices. Some of these apps offer free invoicing services for their customers.
Remember, if your invoice is more detailed and neat, the higher the probability of you getting paid.
- Make them sign a contract
A contract can be used as a formal proof of evidence against them, so it is advisable to have one and instruct them to sign it. If you have a contract, most likely they will feel obligated to pay you since they are aware that you will take legal action once they run away.
A contract may look like a security agreement or a personal guarantee, regardless of the appearance, a contract is important for businesses before providing any services.
A personal guarantee is an agreement made by a personal guarantor to repay any debt a business owes to another service provider when buying any products if a company fails to pay the debt.
On the other hand, a security agreement can also be used to establish a lien on the merchandise or equipment sold to protect you from the bankruptcy filing.
- Make payment terms clear and easy to understand
If the words in your agreement, invoice, or contract aren’t clear, most likely you’re digging your own grave here. It is essential to create a well-detailed payment term for your client so that you won’t face any trouble in the future.
It is recommended to create a time frame or a deadline in which you’d like to be paid and don’t forget to make it crystal clear in the documents. Also, you can offer different payment methods for the convenience of your clients to make it easier for them to clear their invoices.
Don’t forget to keep all the necessary documents from your clients such as contracts, a copy of invoices, and receipts for references in case trouble will come forward in the future.