When it comes to collecting past-due invoices, unlike fine wine, unpaid invoices age like milk. The longer they sit, the more likely they are to spoil. Early detection and action are therefore the key to getting paid. This article will discuss the need to move quickly when collecting past-due invoices.
When Collecting Past-Due Invoices, The Window For Voluntary Payment Closes Quickly
The older the debt is, the less likely you are to recover it. One reason is that customers who pay voluntarily – meaning, without a lawsuit – are likely to do so on time or within 30 days of when it’s due. If a customer’s more than 90 days late, it probably doesn’t plan on paying you.
But you never want to let it get that far, and should be proactive with past-due accounts. Once an account is a few weeks late, reach out to the customer and ask if there’s a reason it hasn’t been paid. If the customer is acting in good faith, try to work out any issues amicably. If it just doesn’t want to pay, then collecting past-due invoices will probably need a lawsuit.
When Collecting Past-Due Invoices, Early Detection Is Key
Since your window for voluntary payment closes rapidly, you should watch your unpaid receivables closely. Detecting problems early lets you nip them in the bud.
In practical terms, you should review your receivables once or twice a month using an Accounts Receivable Aging Report, which lists past-due invoices by age so you can identify problem accounts. You can easily generate this report on QuickBooks or other accounting software.
Staying ahead of problems makes it easier to resolve them. An AR Aging Report is a click away on your keyboard, and reviewing it once or twice a month should be part of your regular practice for collecting past-due invoices.
For more information on collecting past-due invoices, or if you’d like to discuss a specific collection issue, call me at 856-667-1669 or contact me here.
This material is for informational purposes only and should not be construed as legal advice. No person should rely on this information without seeking the advice of an attorney.