Hopefully, clients and customers will pay on time and without issue. OK, we know that’s not always the case, and customers occasionally, for any number of reasons, won’t pay their bill. Fortunately there are options to take in this situation, as well as measures to try and avoid overdue bills.
Prevention is better than cure
Sometimes customers simply forget to pay an invoice, and a gentle reminder is all they need. Consider setting up automatic payment reminders when issuing the invoice. It reduces the administrative burden of following up individual invoices, and gives the customers a nudge to pay before the invoice is overdue.
Depending on the circumstances, you might want to edit the tone of the message. For instance, our Payment Reminders feature has a content section so users can add a stern warning or friendly reminder. The feature also allows users to control how many reminders are sent, and on what days they are sent to customers.
If you send invoices manually, set reminders so you remember to send on reminders! It will help you keep an eye on any payments becoming due so you can take action ahead of time.
Warning legal action…
When a customer really won’t budge on paying, it can sometimes result in legal action. Because of the costs (and inevitable relationship breakdown) it involves, legal action on overdue payments is very much a last resort.
Send a late payment demand or letter before taking any action. Many customers will pay the outstanding bills once receiving a warning of impending legal action unless they pay by a certain date.
…and taking legal action
If the customer still won’t pay, you may decide to take court proceedings against them. Debts of up to £25,000 are dealt with in the small claims court in England and Wales. Any claims over £25,000 are then dealt with in the High Court. But you will need to pay a fee to start proceedings at this point.
For claims of less than £10,000, the court may encourage you to use their mediation service. If you’re able to settle before the hearing, you may get back some of your fees.
If the court decides that a hearing needs to take place, which is likely if the debt is over £10,000, you’ll have to pay some extra fees.
You don’t usually require a solicitor for small claims hearings, but it is certainly advisable for larger claims as the loser could be made to pay the winner’s costs. If the court finds in your favour, it will award a judgement ordering the customer to pay you. If it’s a small claim, this will be a county court judgement (CCJ).
Taking a claim to court can be costly, and a risk as there is no guarantee that the court will find in your favour. So it is advised that you seek legal advise before pursuing this route.
To learn more about how Pandle’s refreshingly simple bookkeeping software can help your business, talk to our friendly team today by using the live chat button on screen. Set up your free Pandle account, or try a free trial of Pandle Pro – no card details are needed.
