How to manage unpaid customer bills: our tips for VSEs and SMEs

12.6 days late: that’s the average payment delay between businesses in France. A worrying figure for VSEs and SMEs, where each day’s delay can jeopardize cash flow and hamper growth. So how can you manage customer overdue payments and avoid disastrous consequences? Find out in this article how to reduce late payments and protect your company’s financial health.

Keeping track of overdue payments through rigorous accounting

Accurate, up-to-date accounts receivable management is essential if you are to keep on top of your receivables. It enables you toquickly identify bad payers and take immediate action.

If you have the resources in-house, make sure you carry out a daily accounting pre-lettering. This good practice will help you avoid unnecessary reminders to customers who have already paid their invoices. In this way, you’ll be able to maintain smooth business relations.

What’s more, to simplify your financial management, you can also turn to digital tools. Software such as Sellsy, Tiime, Qonto or Pennylane offer a clear, centralized view of your accounting. What’s more, with shared access to your chartered accountant, you can transfer your supporting documents in just a few clicks. This saves time and improves communication with your partner.

Anticipate unpaid bills with solid payment terms

To prevent unpaid bills, make sure you communicate your payment terms with your customer before any commitment is made. To get off to a good start, it’s essential to draw up clear and precise General Terms and Conditions. They should specify your invoicing terms (between 30 and 60 days from invoice date), the expected payment terms, and the amount of any penalties applied in the event of late payment.

Before launching a project, it’s essential to have your terms and conditions signed. We also recommend that you include your payment terms on your quotation or order form. In the event of a dispute or collection procedure, these documents will become tangible proof to counter the bad faith of certain partners.

How to handle customer overdue payments out of court?

Rigorous monitoring of your accounts enables you to remind your customers even before their payment is due. In this case, a simple reminder e-mail may be enough to avoid a delay.

You realize that the due date has passed and the invoice remains unpaid? Contact your debtor quickly to find out why. Remain patient and courteous: it could be a simple oversight or temporary financial difficulties. This dialogue will preserve your business relationship while ensuring that your customer settles his debts promptly.

On the other hand, if you don’t receive a reply, the situation may become more complicated. In this case, you’ll need to send a reminder letter, in which you can propose a new payment deadline to your customer.

Still not receiving payment for your bill? The final step is to send a letter of formal notice to pay. In this registered letter, you specify that if payment is not received by the due date, you will be obliged to take legal action to collect the invoices.

Delegate collection of customer receivables

If your amicable collection attempts fail, it’s time to turn to the professionals. Contact a court commissioner or a collection company to take over and initiate legal proceedings.

What legal procedures are needed to deal with unpaid customers?

For small businesses, there are faster and less costly alternatives to traditional legal proceedings such as summons for payment. These include :

• injunction to pay: after submitting all your supporting documents to the court, your debtor customer will be obliged to pay his unpaid invoices by court order;
• simplified debt recovery procedure: reserved for debts of less than €5,000 (including interest), this allows you to appoint a bailiff to reach an agreement with the debtor without going to court.

Using collection companies to manage receivables

If your receivables are large or numerous, you can call on the services of a collection agency. This agency can take charge of the entire management of your unpaid invoices, from amicable reminders to possible legal action. However, this service comes at a rather high cost (on average, between 10 and 15% of the invoice recovered).

Why entrust the management of your unpaid bills to an office manager?

Hiring an office manager to handle unpaid invo ices offers a number of advantages for business owners. VSEs and SMEs in particular often lack the internal resources to deal with these issues. Here are 5 reasons why you should enlist the support of an office manager for your debt collection needs:

• Save time: the office manager has the expertise needed to manage your customer accounts. He’s ready to take on these time-consuming tasks right away, freeing up your time. What’s more, he or she can adapt to your company’s specific needs, for a tailor-made receivables management strategy.
• Preserve your customer relationships by keeping sales management in-house. Unlike the sometimes aggressive practices of debt collection agencies, the office manager favors a diplomatic approach, in line with your company’s values.
• Improve your internal processes: thanks to his or her experience in different structures, an office manager can suggest ways of improving your accounting procedures. They can also work with you to set up monitoring tools or automated reminders.
• Delegate other tasks: the office manager profession encompasses a whole range of business management skills. In addition to dealing with unpaid bills, they can also help you with other projects, such as HR assignments, quality certification or even managing your social networks.
• Optimize your costs: by working with a freelance office manager, you only pay for the time you really need. An interesting alternative to expensive collection agencies.

How to manage unpaid invoices in the workplace: key points to remember

Are you facing late payments from your customers? Amicable reminders are generally sufficient to recover your debts. But if they remain unpaid, you may need to take legal action, with the help of a judicial commissioner.

In all cases, we recommend that you adopt preventive measures to limit late payments. These include meticulous management of your accounts receivable and precise formalization of your payment terms.

Need help structuring your accounting procedures or managing the collection of unpaid bills? A freelance office manager can be an ideal partner for small and medium-sized businesses. At CHO Digital, we offer you personalized support that respects your company’s human values. Want to find out more? Take a look at our office management services, or contact us today to request a quote!