When wondering what to do if a client doesn't pay an invoice, prioritize effective communication, structured follow-ups, and understanding your legal options – but it's also crucial to know when to escalate matters.

Establish Clear Communication

When you encounter a non-paying client, it's crucial to start by reaching out to grasp the cause behind the invoice that hasn't been paid. An empathetic approach can yield more information and pave the way for a solution. For instance, if a client has cash flow issues, they may be more likely to respond to a proposal for a payment plan.

Communication tip: Try starting the conversation with a question: "I noticed that a recent invoice has not been paid. Is there anything on your end that I should know about that is causing the delay?" This way of starting the dialogue shows your willingness to understand the situation and work together to find a solution.

Implement a Structured Follow-Up Process

Ensure that invoices remain unpaid don't go unnoticed, especially when deliberating what to do if a client doesn't pay. Set up and adhere to a systematic follow-up process. Initially contacting the client a week after the payment due date, followed by regular intervals, demonstrates professionalism and persistence.

Example: First follow-up 7 days post-due date; secondary follow-up 14 days post, escalating with each step.

Explore Legal Options for Enforcement

Should communication and follow-ups fail, it's important to explore your legal options thoroughly when deciding what to do if a client doesn't pay an invoice. Consider starting with Alternative Dispute Resolution (ADR - e.g. mediation, arbitration or negotiation)options, followed by escalation to small claims court or engaging a collection agency if necessitated by the situation.

TIP : If alternative dispute resolution does not lead to success, the typical next step is to file a lawsuit in small claims court to recover the amounts owed.

Strengthen Your Contractual Agreements

Prevent future incidents by reinforcing your contracts with explicit payment terms, late fees, and consequences for non-payment to better handle situations where a client doesn't pay an invoice. This proactive measure fortifies your stance legally and financially.

Example: Include a clause stating "A late fee of 2% per month will be applied to balances unpaid beyond 30 days."

Improve Invoicing and Payment Policies

For simplifying the invoicing process and as a proactive step in managing unpaid invoices, consider using InvoiceOnline. It enables you to create various types of invoices quickly and hassle-free right in your browser. Residential electronic invoicing systems not only facilitate promptness and accuracy but also offer tracking capabilities and friendly reminders for unpaid invoices.

Tip: Leverage electronic invoicing systems that can send polite payment reminders every two weeks to the client, reducing the need for manual follow-up.

Consider External Help

Occasionally, seeking external assistance from a collection agency or legal counsel is an effective measure when you're dealing with unpaid invoices. These professionals can bring weight to your demands and signal the gravity of the situation to the client.

TIP: A well-drafted professional demand letter from an attorney can demonstrate you're serious about pursuing what's owed.

Mitigate Future Risks

In the future, to mitigate the risks of non-payment and minimize instances of questioning what to do if a client doesn't pay an invoice, adopt practices like conducting credit checks on new clients, building positive customer relationships, and maintaining a financial buffer.

TIP: Develop a practice of reserving 5% of earnings as a contingency fund to cover operational costs when facing payment delays.