#Collecting past due invoices series

Impose a Credit Holdĭo not allow the shipping department to send any more shipments to the customer, and make sure that the customer knows about this credit hold. This is essentially a 'nastygram' issued by your attorney, and on the attorney's official letterhead, warning of further consequences if payment is not made at once. If the customer still has whatever you have sold to it, then arrange to have it returned.

#Collecting past due invoices series

If the customer simply cannot pay at this time, then set up a payment schedule for a series of future payments, preferably backed by a personal guarantee by the owner of the customer.

If you cannot get someone in the customer's accounting department to authorize payment, you may have better luck if your CFO or controller contacts their counterpart.

Your sales department may be able to work back channels at the customer to obtain payment. You can then switch to a variety of tactics, depending upon what you learn. If a dunning letter elicits no response, then it is time for a person-to-person call to find out why the payment is not being made. This is a reminder letter (or fax or email) that states the amount due for payment, the invoice number, and the invoice date. Otherwise, customers are likely to hold up payment, even if the error does not involve the price stated on the invoice. Have a second person proofread complex or large invoices. Correcting these in-house problems will eliminate many collection issues. Eliminate Shipping Errorsĭoes the company have a history of issuing incorrect or damaged products? If so, the collections effort will be much harder. Should you have granted credit to a customer to begin with? Any medium-to-large request for trade credit should call for the completion of a credit application, the examination of the customer's financial statements, and the review of a third-party credit report. Some combination of these items should accelerate the collection of cash. Require payment of all or a portion of the amount due before delivery is made, compress the payment terms to fewer days, and/or state that you will charge late fees. There are many steps available for collecting overdue invoices, as noted below. It is essential to do so, since not receiving payments on time can cause major cash flow problems. If a business extends credit to its customers, it is likely to experience situations where it must collect a past due invoice. A past due invoice is a billing that has not been paid as of its due date.