If you want to maintain a healthy cash flow in your business and smooth business relationships, learning to handle late payment invoices is crucial. You need to develop a structured approach in your business to deal with difficult customers, send polite reminders, outline clear payment terms, and maintain detailed transaction records.
When your client’s invoices become overdue, start the collection process for outstanding invoices for invoice recovery with a friendly reminder that allows your clients to make payment and sort out any pending issues. If you experience persistent delays in payment, try to escalate the issue up the company’s hierarchy and consider issues like the imposition of late fees and penalty payments. You can also resort to using a collections service.
As 54% of SME’s experience late payments in India with at least 6 days late payment in most cases. 20% of the invoices are paid 15 days late, 33% over one month late and another 20% , 60 days or more. Incorrect invoicing and non-receipt of invoice payments are also key causes.
Taurus Collection India is a company that helps businesses recover money owed to them by their customers. We specialise in ethical debt collection, meaning that we contact individuals or companies who have not paid their bills on time and work to resolve the issue. Taurus Collection India uses legal and professional methods to ensure that payments are made, helping businesses maintain their cash flow and client relationships. Our services aim to make the process of collecting overdue payments smoother and more efficient for both the creditor and the debtor.
Proper cash flow management ensures that a business has adequate liquidity to meet the daily expenditures of the business. Your business can sustain its operations properly if there is regular cashflow from your accounts receivable. It helps to keep the business solvent. Just like collecting accounts receivable is important; payment of accounts payable is also equally important. This is necessary to keep an uninterrupted supply of raw materials and resources and preserve your business’ reputation. You can invest in your growth and expansion plans, and this helps you to improve your financial decision making.
Automated Invoicing system
Invest in an automated invoicing system that ensures that no invoices are skipped from being sent to the customers. This will ensure up to 75% faster collections than manual invoicing.
Clear Payment Terms
Specify clear payment terms on the face of the invoice. Include phrases like net 30 or conditions like late payment fees and penalties applicable.
Tracking Invoice Payments
Track the invoice and due date to send friendly reminders to your customers regarding the prompt payment of your invoices. Use an automated reminder system or email reminders to remind the client about the upcoming due date. Keep engaging with the client proactively to prevent communication delays.
Follow Up Letters
In case of late payments, provide a polite follow up letter. Provide a clear, detailed summary of the invoice to serve as a reminder and ask courteously why the payment has not been rendered. Be professional and focus on always maintaining a positive relationship with your client.
Strong follow ups
Use a second, strong, formal payment reminder in case payment is still not made. Use stronger language to communicate the penalties and late fees and other consequences of being in default. Make sure to reattach the invoice along with the request for payment.
Payment Plans and Grace Periods
If you are aware of the financial difficulties that the client is in, outline a payment plan or a grace period as a solution. Remember, you have to balance the need to maintain positive client relationships with your customers with the need to ensure proper collections of accounts receivable. This way you will preserve positive relationships and the good will of clients and a greater appreciation for the client’s difficulties.
Escalate to legal action:
If all your efforts are fruitless, then it is better to enforce a legal case. The different types of legal action that you can initiate are described in another article on this website. This provides an exhaustive list of legal remedies that you can activate.
Managing overdue accounts effectively is necessary to maintain the cash flows of your business and stabilise the financial health of your business. We discuss below the best practices for handling unpaid invoices and steps to take when clients delay payments:
Prompt Invoicing
Prompt invoices and setting clear payment terms is the first step to ensuring proper collection of your unpaid invoices. This has been described in the paragraphs above. Prompt invoicing on the completion of the contract is key to ensuring complete collections.
Automated invoicing and reminders:
Accounting software like QuickBooks India, Zoho Books, and Tally Prime are ideal for automated invoicing and follow-up. Their systems allow you to track invoices and send reminders.
Use a carrot and stick approach towards collections:
Incentivize early payments by offering an early bird discount and imposing penalties for late payments. This will encourage early payments and deter late ones.
Consistent follow-up:
Do regular follow ups to ensure that you keep the pressure up on your customers for payments. Use polite emails and phone calls to contact your customers professionally, as maintaining professional relationships during debt recovery is important. Then follow up with a firm request and an escalated warning. The etiquette on how to communicate with clients about overdue invoices is important. Maintaining awareness of how to ensure timely payments from customers.
Focus on building positive relationships with customers:
When you build positive relationships with clients, you can appreciate their problems and ground realities better.
Multiple Payment Options:
Offer solutions that include payment options using multiple payment platforms, like payment wallets, online transfer methods, and credit card payments, to suit the client’s convenience. When the payment modalities are structured for the client’s benefit, then collections become easier.
Credit Rating of Customers:
Assess client creditworthiness by using credit rating methods, which will enable you to determine each client’s individual creditworthiness. Larger clients who have a regular payment history will require a better credit rating. Doing such a credit assessment during your client onboarding process and regularly updating it depending on their changing financial circumstances is one of the important tips for chasing late payments from your creditors.
Using professional collections agencies
Hiring a professional collection agency like Taurus Collection India will ease your collection headaches. Right from fast collections to legal measures, we are a one stop shoppe for all collection solutions.
Accurate Records
Keep accurate records of invoices and all communications with the client, as these will come in handy later on if required as proof.
Legal Solutions
Legal solutions are the last resort and must be affected if all other measures fail. Explore legal options for recovering unpaid debts in India. At Taurus Collection India, we also offer legal solutions from our in-house group of lawyers.
In India, chasing unpaid invoice payments requires a strategic approach, balancing persistence with professionalism. Timely follow-ups, clear communication, and setting expectations upfront are essential. Using tools like reminder emails, phone calls, and formal notices is critical, but businesses should also be aware of legal avenues, such as sending a legal notice under the Indian Contract Act or filing a case under the MSME Act for quicker dispute resolution. Maintaining proper documentation and fostering strong relationships can help minimise delays, but staying informed of local laws and leveraging digital payment platforms can streamline recovery processes.
Taurus Collection India is a leading debt collection agency specialising in efficient and ethical recovery of outstanding debts. With years of experience, they offer tailored solutions to businesses across industries, ensuring that debt recovery is handled professionally while maintaining strong customer relationships. Taurus Collection India employs a skilled team of negotiators who use a systematic approach to recover debts, allowing businesses to focus on growth while minimising financial risks.
Partner with Taurus Collection India today to streamline your debt recovery process and secure the financial stability of your business. Reach out for a consultation and let us help you recover what’s rightfully yours!
Taurus Collection is a B2B & B2C collection agency that goes beyond the ordinary. With a commitment to excellence, we offer a ‘No Collection, No Fee’ service that is backed by our in-house advocates with an exceptionally high success rate.
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