In the world of software, collecting unpaid invoices is a crucial part of running a business. The ability to manage your cash flow and turn unpaid invoices into actual cash gives software companies a much-needed financial boost. Unfortunately, many software companies don't know how to handle unpaid invoices in an effective way.
Why unpaid invoices are a problem
Unpaid invoices are a problem for software companies for several reasons. First, they represent lost revenue. When you send out an invoice and your client doesn't pay it, that's money that could have been in your bank account but isn't instead.
Second, unpaid invoices represent bad debt — or more accurately non-payment of services in this case — that may end up costing more than just their face value if not collected properly or quickly enough. If the client doesn't pay within 30 days of receiving their invoice (which is standard), they'll likely rack up interest charges on top of what was already due. This can be costly in both time and money for both parties involved if left unchecked over time.
What to do about an unpaid invoice
- Send a reminder
- Send a final notice
- Send a demand letter
- Ask for proof of payment (invoice, credit note)
- Ask for an alternative payment method
- Seek legal advice from a collections attorney to recover what you're owed
Debt collection is a problem in the IT sector
It's not just about money, but also relationships. If a client doesn't pay their bill and you don't do anything about it, they may see you as unreliable, disorganized, or careless. This can have a negative impact on future sales opportunities with that customer and others who might hear about your inaction through word of mouth.
As an entrepreneur or business owner, debt collection is an important part of running your company. It helps ensure that you get paid for your services while creating goodwill with customers who are happy with their experience working with you (and paying on time).
Conclusion
We hope that this article has helped you to understand the importance of collecting unpaid invoices. If you have any questions or concerns about debt collection, please feel free to contact us today.
