01/04/2025

Unpaid invoices can be a major problem for businesses, hampering cashflow and taking huge amounts of time to chase.

If you’re serious about being paid, debt recovery starts long before a customer is invoiced. In fact, it begins before you even engage a client or customer.

Here are my top five tips on how to recover money owed to you in unpaid invoices:

 

Tip one: Don’t skimp on your contractual documents

Your first job is to put in place all your ‘contractual documents’. These will be used in dealing with each client. For example, if you have an opening account form, this needs to be completed with full details about your clients or customers and, if a limited company, the directors too.

This form will refer to your company’s terms and conditions of business and, before anything happens, the individual or the director must sign that form. This gives you a credit limit to work to but the form will also state that the individual or director has received a full copy of your terms, has read these and accepted them as part of the contract.

The other important documents that are vital to have in place are purchase orders, delivery notes, invoices, statements and your credit control letters.

Putting this paperwork in place might seem like a chore, but trust me, this is time well spent as these documents will ensure you are fully protected in case you have to take action to chase unpaid invoices.

If you have, for example, a signed opening form referring to your terms, a signed purchase order, signed delivery notes, this package makes up your contractual documents and will be what you rely on to recover outstanding debts.

 

Tip two: Get your invoice right

One thing I see a lot are invoices sent without any narrative – just stating the amount owed. The invoice should set out what the contract refers to and what goods or services were provided, as well as the amount due.

I have seen over and over again invoices which are endorsed with ‘Our terms and conditions are stated overleaf’. These terms do not form part of the contract as these are classified as post-contract terms, so you will not be able to rely on these.

If you’ve followed tip one, you won’t need to put your terms on the reverse of the invoice anyway. Your client or customer will have already received and signed them when placing their order.

 

Tip three: Implement a clear credit control system

Put in place a substantial and robust credit control system. If your terms state payment should be made within 30 days, place a call to the customer at 42 days. Keep a full note of this call on your system. This will be evidence which can be used if the matter goes to court.

Remember at that time, court is not on the horizon and hopefully, payment will be made within seven days of your call. If not, ring again or send an email with a copy of your outstanding unpaid invoices.

State all the facts, be clear and professional. Your emails, letters and records of phone calls are evidence and could be read by a judge in three to six months’ time!

 

Tip four: Timing is everything

I wouldn’t waste your time chasing debts for months and months. The key is to strike while the iron is hot. A ‘fresh’ debt is a collectable debt. It gets harder and harder to collect a debt if you leave it for a long period of time.

From experience, when you demand payment do not say please pay within seven days or 14 days. This can lead to arguments, for example, was it seven days from the date of your email or letter or seven days from the time they received your letter? Always say, for example – Please make payment by 4pm on 5 April 2025. This gives a definite date, which they can work to.

 

Tip five: Don’t be afraid to place customers ‘on stop’

At the earliest opportunity you should warn your customer that unless payment is made by a certain date they will be placed ON STOP. It might sound harsh, but refusing to trade further with them until the debt is cleared concentrates the mind and, at the end of the day, why would you continue to provide goods or services to someone who has a poor record of paying for what you are supplying?

 

Need help with unpaid invoices?

I hope these tips help you to chase unpaid invoices and recover outstanding debt with confidence. Chasing payment can be time-consuming and tricky, but your contractual documents and procedures create a clear structure to guide you, providing a reference point for difficult conversations and, should it come to it, court proceedings.

If you need any help with putting your contractual documents in place, introducing robust credit control procedures or recovering unpaid debts, please don’t hesitate to get in touch by emailing debtrecovery@beswicks.com or phoning our Stoke-on-Trent solicitors on 01782 205000 or our Altrincham solicitors on 0161 929 8494.