You’ve worked hard, or maybe you delivered a service to someone or sold something to a client. The next step, of course, would be to create an invoice according to all the correct rules of accounting.
Can you close this project now and move on to the next one?
Almost! Your work might be finished, but your customer still has to pay the invoice.
During your career as self-employed, you will, however, probably encounter some unwilling customers.
This is not a reason to quit though. Your work, just like the work of everyone else, deserves to get paid.
Getting paid for your hard work is about being able to survive your status as self-employed; according to the UCM in Namur (social security provider), one freelancer out of every four freelancers goes bankrupt because of unpaid invoices!
From our experience, it is always a difficult thing to try to claim your money. That’s why we prepared a mini-guide below to help you and make sure your invoices are getting paid!
As quickly as possible: if you’re using Accountable than we already informed you that the due date of your invoice has passed. You did not receive the payment yet on your professional bank account. You have allowed ten days, a maximum of two weeks to expire since the due date of your invoice and nothing has happened. Now the time is there to start contacting your customer again.
The continuity of your business, of your activity as self-employed depends on your clients paying you on time. How you manage your invoices, and their payments determine your reputation on the market as well.
Before you start the process of trying to recover your unpaid invoices, you should ask yourself a few questions: what is your relationship with the customer that did not pay their invoice(yet)? Is your customer satisfied with the work you supplied? How important is your client in the grander scheme of things, like comparing to your other clients? Do you want to build a long-term relationship with them?
Whatever you do next, keep the answers to these questions in the back of your mind.
Sending a letter at first might sound a bit intimidating directly to your customer. The best way to approach someone and to avoid any confusion in writing is always first to try to get them on the phone. Of course, if you want to have some form of written proof, you can always send an email as well. Whichever option of the two you choose, make it very easy for the receiver. Tell them who you are and what invoice you’re referring too.
At this moment it is still a bit early in the process to be too though; after all, it might just be an accident of your client, your client might have just forgotten to pay. Maybe when you deliver a product, they received the product but found there was something wrong. Maybe your invoice was missing some information. Whatever it is, encourage your client in case there are any remarks to contact you.
Sending a simple reminder like this shows that you are always following up with your client and that you’re willing to build a long-term relationship. Make the most of this opportunity !
TIP: Don’t indicate that this is, in fact, the first reminder. Doing so will give the impression that you’re okay with sending more of them and extending the period of you not getting paid.
Didn’t you get any reaction on your first reminder? Now it’s time to send a second reminder. The best way to do this is by using an old school letter or email.
This time you can be a bit more strict and remind your customer on your terms and conditions mentioned on your invoice, or even better, the terms and conditions signed upfront before doing any work with you. You can also remind your customer that he risks to face default interests.
If after these two sets of reminders you still don’t receive anything it is time to send a third reminder by registered letter. From this official notice of default, you can request the fine for defaulting that you stipulated in your terms and conditions in case of a default.
Are you still getting nothing? It’s time to bring in the big guns and get some professional help. When you’re hiring a professional, there will be a higher probability that your debtor will change their mind and start paying…
TIP: if your debtor is disputing your invoice, do not resort to a collection agency. In this case, only the court can help settle the dispute.
Some more background information
Are you looking for a way to get more legal security without the need to go all the way to court? Maybe you should consider an extrajudicial recovery procedure! Following the knowledge that one-third of all invoices between companies were paid late, in July 2016 the Belgium legislation introduced this procedure. These late payments caused some serious liquidity problems after all.
If you want you can use this legislation if:
If you can meet these three conditions, you can start an extrajudicial recovery procedure. So what does this mean? You will start with the following process:
If this is the case, you will move on to step two…
=> If the debtor pays, this means the end of the procedure
=> If the debtors dispute the debt, they can switch to a legal procedure holding a strong case
=> If the debtor does not respond, we move on to the next step
The advantage of this new procedure is, that it is a lot less expensive the VBO (Verbond van Belgische Ondernemingen or Fédération des Entreprises de Belgique, FEB) compared the prices of a judicial and extrajudicial procedure based on the different invoice amounts here. As you can see it is fast and effective. Another big advantage is that you don’t have to go to court and therefore are less likely to jeopardize your commercial relationship.
A collection agency? A debt collector? A lawyer? Judicial or extrajudicial proceedings? It is up to you to determine how much time and money the recovery of your invoice is worth.
It is also up to you to choose whether you want to take your client to court and put your commercial relationship on the line. Make sure you have a good dose of patience when you set up this procedure: Collecting a claim can roughly take up to six months.
A golden rule: do not wait to resolve this file. The longer you wait, the less you want to get involved and … the less chance you have of seeing your money.