There are a lot of reasons why someone might not have paid an invoice. It might have simply slipped their mind, and a quick reminder is all that’s needed to get them to pay. They’ll apologise, make the payment and everyone can continue on. It’s not uncommon or unheard of, especially for people who receive a lot of invoices to process and demanding work schedules to keep on top of. But, what happens if they haven’t simply forgotten, and they’re purposely avoiding payment?
How to Recover an Outstanding Invoice
There’s no denying the stress and annoyance that comes with having an outstanding invoice, but there are things that you can do to encourage someone to pay.
- Send a Letter Before Action – The first thing you can do when someone hasn’t paid an invoice is send a Letter Before Action, which is a formal demand for the payment. It sets out a deadline for the payment to be made, and it’s often enough to encourage a debtor to pay up quickly. This is a relatively cost-effective, quick and easy way to recover an outstanding invoice, especially if it works.
- Make a Claim Under the Late Payment of Commercial Debts Act – If you and your debtor are both businesses, you might be able to make a claim under the Late Payment of Commercial Debts (Interest) Act 1998. This allows you to charge a business interest on the debt, which could help to cover any costs that you’ve encountered as a result of the late payment. It’s there to deter businesses from paying late, whilst also compensating you for the delay.
- Charge a Fixed Sum for Late Payment – As well as charging a business interest, you could consider charging them a fixed sum for paying late. The amount you can charge depends on the size of the debt and which band the debt falls into. For example, on debts up to £999, you can charge a fixed sum of £40. For debts of £10,000 and above, you can charge £100.
- Pursue Recovery Through the Courts – If a debtor still fails to pay an outstanding invoice, even after you have sent a Letter Before Action and added interest, you might want to consider taking them to court. This can result in a Judgment Order or High Court Enforcement Officer becoming involved, or even insolvency in serious cases.
- Enlist a Debt Recovery Agency – As pursuing an outstanding invoice through the courts can be time consuming and expensive, it’s often better to enlist a debt recovery agency. With experience, knowledge and a whole host of debt recovery techniques, a debt recovery agency has the skill needed to recover an outstanding invoice quickly.
At Cobra Financial, we offer a professional, efficient and stress-free way to recover debt. Whether it’s an outstanding invoice or an unpaid loan, our experts are on hand to handle everything, from contacting the debtor to organising the payment. You can focus on other things, knowing that the money that’s rightfully yours is being recovered. Contact us to find out more.
