Invoice Dispute Management: 5 Common Mistakes That Lead to Unpaid Invoices

It doesn’t matter whether you run a small business or you’re working on your project, a late payment can always ruin your customer relationship and damage your reputation. If you’re not addressing the problem, it will create more unpaid debts for your business.  

Well, don’t be worried. There is a saying, “Prevention Is Better Than Cure”.   

If you want your business or project to be free of unpaid debts, you can do the following steps to avoid unpaid invoices before even occur.   

 

Five Common Mistakes to Avoid Unpaid Invoices  

When dealing with unpaid invoices, make sure you know how to avoid the five invoice mistakes listed below so that you always get paid on time and keep your customers happy.  

 

1. Concentrate on Big-Shots than Small Business Owners  

If you have a big customer who owes you a tremendous amount of debt, it’s essential to make sure that they are paying. You need to remind them regularly with a proper invoice reminder or else it’s easy for them to forget the debts they owe you.   

You should contact your customer every two weeks until they pay off their debt. Sending an email or SMS reminding them of their outstanding debt and asking when they plan to pay it off is a wonderful approach to do so.  

If your customer refuses to pay or denies the invoice reminders, you can issue a formal notice filing lawsuits if they refuse or fail to pay. Even if they refuse, you can take legal action to recover your debts from them.  

  

2. Send Invoice Reminders on Time – Never Wait Too Long  

The majority of you will wait many days before sending out invoice reminders. It may no longer be visible to your customer after two weeks. Customers may assume that there must be a final shipment or a delay if you do not contact them shortly after the order is sent or the service is delivered. Sending invoices after a few weeks is pointless since your customers will forget them.  

As a result, you should send a reminder invoice as soon as possible so your customer is aware that they still owe you money. Two weeks after the order is shipped is ideal, but one week is fine if your customers pay quickly. If they aren't, don't wait more than a week. After then, it's too late, and your payment will be further delayed.  

You can also set automated reminders that can send automated Email or SMS invoice reminders at regular intervals so that your customers never forgot that they owe you money.    

  

3. Avoid Slow Payment Terms  

Have you ever received a late payment or payment on an invoice over 30 days past due?   

Almost 60% of companies have reported late payments.  

It's a constant spiral since late payments frequently result in unpaid invoices, which leads to even slower payments later on.  

The best way to avoid these late payments is to shorten your payment terms for your customers. If you presently have a 30-day payment period, consider shortening it to 15 days. You may be astonished at how rapidly it may enhance cash flow and help you in clearing off invoices!  

 

4. keep Track of all Unpaid Invoices  

If you’re not keeping proper track of your unpaid invoices, it’ll be difficult for you to follow up with your customers and remind them about their outstanding payments. An accurate record will help you send invoice reminders whenever you needed.  

The records for unpaid invoices will help you to negotiate confidently if the customer has not responded to your invoice reminders for several months. In that case, you can send them a final reminder saying that if they don’t pay, then you will have no choice but to file a complaint.  

With the automated debt collection management system, you can have clear and real-time insights and reports which allows you to keep track of all your unpaid invoices easily.  

 

5. Verify the address before sending the Invoice Reminders  

People frequently act with overconfidence, which leads to blunders and errors. It's OK to be certain of what you're doing. At the same time, it's not a bad idea to double-check the email address or phone number of the customer to whom you're sending the invoice reminder.   

If you entered an incorrect email address or phone number, your customer may not get the invoice reminder, which may automatically add unpaid debts to your business or organization.   

This can be avoided by doing the following:  

• Before sending an invoice, double-check that you have your customer's mailing address correct. 
• Check that it is correct and compare it to a recent purchase order or other written communication from your customer.  
• If you don't have a tangible copy of their address, call them again and request it.  

  

Maxyfi – Best Debt Collection Software   

Maxyfi is the best online invoicing software for sending effective and automated invoice reminders, tracking time and costs, and receiving payments faster. With a free invoice template library and time-tracking capabilities, you can begin delivering efficient invoice reminders in minutes from your computer or smartphone.  

Maxyfi's debt collection software enables company owners and entrepreneurs to handle their customers' payments in one place, allowing them to stay on top of cash flow and avoid having unpaid invoices pile up.  

  

Final thoughts about Unpaid Invoices  

You should always ensure that your unpaid invoices are calculated and sent properly. Incorrect calculations might result in an invoice that is too high or too cheap, which no one wants.  

These basic cash flow mistakes may harm a company if they go undiscovered and cause it to lose money over time.   

If you want to learn more about unpaid invoices, kindly visit Maxyfi blog.