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Tackling unpaid invoices - top tips for recovering unpaid invoices

View profile for Jade Fairhurst
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Tackling late payment in the UKs creative sector

When faced with an unpaid invoice, or a series of unpaid invoices with a persistent debtor, the obvious first action is to chase the debtor for payment. However, we understand that despite your best efforts, sometimes your efforts may not be fruitful.

It is always best to ensure that any outstanding debts are chased in writing so that you have a paper trail of what action you have taken to recover the outstanding debt and when. It is good practice to ensure that you highlight to any debtors your company’s late payment terms, so that they are aware of any penalties they may face should the debt continue to go unpaid.

If the invoices continue to go unpaid, and/or you are not receiving a response from the debtor, then you may have no option but to consider next steps. We have set out below some tips in dealing with persistent debtors:

Act quickly

If you have a contract with the debtor, and they are continuing to rack up significant debts, you may want to consider whether you look to terminate your contract with them, to avoid them accruing further unmanageable debts.

From experience, the longer the debt continues to accrue and the more sizeable the debt, the less likely a debtor is going to be able to pay. This is even more so if the debtor is experiencing financial difficulties.

Consider a method of alternative dispute resolution

Sometimes it is possible to avoid litigation by referring any dispute over unpaid invoices to a form of alternative dispute resolution, such as mediation. There are a number of different methods of alternative dispute resolution, and not all may be suitable for your particular kind of dispute.

Consider a settlement agreement

If you have a responsive debtor, it may be worthwhile that you consider whether you are able to come to some arrangement with them, depending upon the nature of the debt, to allow them to clear the outstanding sums.

It is important that the terms of settlement are recorded in writing, and that both parties sign the document to confirm that they agree to be bound by the same.

Final action

If you are unable to reach any form of agreement with the debtor to recover your outstanding monies and/or the debtor fails to engage with you, a final letter to the debtor informing them that your standard practice is to pass the matter to a solicitor or debt recovery agent who will add interest and costs to the debt can sometimes do the trick.

Unfortunately, it may be the case that despite your best efforts, the debtor is unwilling to engage, and your debt remains outstanding. If you find yourself in a situation whereby none of your efforts to recover your outstanding debts have proved fruitful, you should act quickly in instructing solicitor or a debt recovery agent to pursue this matter further for you.

At Stephensons we have a dedicated team handling undisputed invoice debt cases on a fixed fee basis to deliver exceptional value for money. Contact our debt recovery specialists on 0161 696 6170.