However for many businesses a late invoice may come as a shock when they receive the invoice. As for any invoice, you need to make sure you still have all the information on record required to get the invoice signed off - the clients purchase order, contracts, quotes and proof of delivery such as a signed delivery note or works sign off sheets.
This way although they may question the lateness of the invoice they cannot dispute it. While you have a statutory right to apply late payment interest and compensation to overdue invoices, since the lateness of the invoice is down to your own error then we would not suggest you apply late payment interest to it. You can use our late payment interest calculator to calculate hte amount to add. It is important to remember that the time limit starts from when your customer last acknowledged owing the debt or made a payment on account against the invoice, not from when the invoice became due.
In theory no company should have invoices outstanding more 10 days past their terms let alone 6 years, just imagine the positive effect collecting on time will have on your cashflow.
The charges can be less than the cost of hiring an employee. Do you have a very old invoice you're struggling to collect? Why not try our CreditXS debt collection service? Submit details of the debt online and we'll take care of it for you. The process can involve several steps.
It requires you to be persistent and patient. In ideal conditions, you would not have to chase unpaid invoices at all. Such matters are easily resolved with a few follow-ups. Where you do end up having to chase a debt, there are certain strategies you can follow to receive payment.
Before you become worked up about a late payment, allow your clients some benefit of the doubt. Try not to jump to conclusions about their intentions and give them some time. Send them a polite reminder for the outstanding invoice and see where the matter goes. With any luck, your issue should be resolved at this stage.
However, if it does not, you might have to take the legal route. This is to remind you that payments against [enter invoice number] for the amount [amount owed as per the invoice] are still unpaid. The due date for payment mentioned on the invoice was [date due]. There is every chance that emails are simply missed. If you do not receive acknowledgement for your email soon, you can try making a phone call. You can speak directly to the people in charge of settling the debt.
Try and get a time-frame by which payment can be expected. This is usually sent in writing in physical form. This is a much more serious demand for payment, and therefore, harder to ignore. If you are afraid that your email will get ignored, a written letter may be a good choice. Consider the following sample. This invoice is now [number of days overdue] days overdue.
This is the last reminder before legal proceedings start. One option is to reach out to a debt collector. They will chase the debt on your behalf. You could also charge late payment fees or interest as penalty.
These can also be stated on the original invoice so a client knows the cost of late payments. You can also report late invoices on public directories such as brodmin. The exposure may encourage your debtors to settle quickly. However, remember to only use this as a last resort. You can refuse to pay old invoices when the 6-year term has expired. If no contact or payments were made during this period, the invoice becomes statute barred.
You can also refuse payment on the grounds of unsatisfactory or incomplete service. However, you cannot simply refuse an old invoice due to its age. If the 6-year term holds, you will be required to settle your outstanding debt. If you refuse payment because of any valid reason, you can face legal proceedings. You must dispute an invoice within 30 days of it being issued.
Some businesses list a clause on the invoice that dictates that any issues should be brought forward within a specific time. This is done to avoid late payments and to limit the hassle of resolving issues. In such a case, any disputes brought after the specified time become invalid. You would be required to pay out the due amount in full, regardless of the service you received. The official rule in the UK is that you are able to chase unpaid debt from up to 6 years in the past.
This rule is under the Limitation Act These limitations outline that a creditor can pursue unpaid debt from a debtor for up to 6 years from the date of the provided product or service.
Again, it would be polite to explain to the customer what has happened and that you are sorry for the delay. You are, however, entitled to payment even if the invoice is long overdue. In the UK, you have a statutory right to apply late fees to invoices that have not been paid on time. You can find more information on the amount of interest you can apply, as well as fixed costs on late payments on the UK Government website.
To do this, you can cancel the original invoice by issuing a credit note. Then, you can create a new invoice with the modified information and send it along to the customer. Put simply, you should issue the invoice as soon as the service is completed or the product is delivered.
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