What Is an Outstanding Invoice?
An invoice is a document that is sent to a customer by a business to detail the products and services purchased by the customers from the business. The invoice establishes the payment obligations and clarifies the method of payments and due dates.
When an invoice has been sent to a customer but not yet paid by the due date are considered an outstanding invoice.
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8 Strategies for Dealing with Outstanding Invoices
Unpaid invoices can start out as just an inconvenience and then grow to threaten the existence of your business. The interruption in cash flow might mean that you can’t pay employees, suppliers and vendors and that you won’t have the money to keep your business operational. The late payments could ruin the reputation of your business.
Unpaid invoices can be a big deal to a company, so it is wise to have strategies to handle this common business problem.
1. Have a late payment fee on your invoices
Demanding money for late payments is a good way to encourage timely payments of invoice. However, you need to have a clearly stated late fee policy in your payments terms at the start of the sale. Have your customers sign an agreement before supplying them anything, so that they are clear with the payment terms.
On your invoice make your late fees easy to spot and read. Some businesses might quote a percentage but why not do the math for your customer for even more clarity.
Total due by August 1: $200
Total due after August 1: $220
When a customer is entering late fee territory, you could give them a call and offer to waive the fee if they pay right away.
2. Write a request letter or email
Your first move when dealing with a late invoice is reaching out to your customer via letter or email. Make the tone of your note polite, quote the invoice number and due date and ask when you can expect a payment. You don’t have to explain what the invoice was for as the details should be on the invoice itself, so you can keep the note short and to the point.
3. Send an overdue invoice
An effective visual cue for your customer might be sending an overdue invoice. That is simply the invoice printed out again with an “overdue” stamp on it. You could also send the original invoice in a payment request email, with or without an “overdue” watermark on it.
4. Send a statement of accounts
A statement of accounts shows all the outstanding invoices an individual customer has with you. If a customer has a few, summarize them into one document or use your accounting software to generate a statement. Once you send this out to your customer, make sure you follow up with a phone call to discuss an overdue payment plan.
5. Make a phone call
Companies that call their late payers on the phone tend to have better results when it comes to chasing late payments. While customers can screen your calls, once you have them on the line, it’s hard for them to ignore you. You don’t have to say much. Just politely identify what is overdue, ask when you can expect payment and wait for your answers. Make sure you don’t get off the call until you get answers as to when payment will arrive.
6. Cut them off until the invoice is paid
If you keep providing goods and services you are not getting paid for, your business will be unsustainable. So, if a customer stops paying, stop fulfilling their orders and tell them what bills need to be paid before you’ll start supplying them again. This is an aggressive tactic that might offend some customers but it can also prove to be very effective.
7. Hire a debt collector to go after your unpaid invoices
Debt collectors have the professional skillset to get overdue invoices paid. It initially doesn’t cost anything to get them on the case but they will take 25% or more of the money they collect. This move will likely bring an end to your relationship with the customers so make sure you’ve considered all other options first.
8. Involve a lawyer
Hiring lawyers is the next step to make if the debt collectors did not make any progress. The legal action you take will depend on the type of organization you’re dealing with. A specialist lawyer might be needed to deal with sole traders, partnerships and companies, as things could get complex. Debt collectors also have in-house legal experts that might be able to connect you with the right lawyer for the case.
Does Outstanding Mean Overdue?
Outstanding invoices are those that the company has yet to pay. Accounts payable tracks all outstanding invoices and schedules them for payment. The accounts payable department receives the invoices, review them for accuracy, seek management approval and records them into the accounting system. To ensure timely payment to vendors accounts payable often set up a schedule.
An overdue invoice is one a company has yet to pay and is past the invoice due date. Failure to pay the invoice by a due date makes an invoice overdue. These invoices might carry a penalty late fee that customers must pay in full. Past due payments usually appear on a company’s accounts payable report and often appear on the top and may indicate how many days a payment is late.
What Is Unpaid Invoice?
An unpaid invoice is the same thing as an outstanding invoice. When an invoice has been sent to a customer but not yet paid by the due date are considered an outstanding or unpaid invoice.
What Is Outstanding Payment?
An outstanding payment refers to the outstanding unpaid balance of the current amount due. The interest-bearing balance of a loan or product or service bought on credit from a company. It could also refer to a payment that has been made but not has not gone through and is not marked as paid for some reason.
What Does Invoice Due Date Mean?
The invoice due date is the date listed on an invoice sent from a company to a customer to set the expectations up of when payment is due. Due dates refers to the day the invoices must be paid at the latest.