How small business owners in the Southern Highlands can tackle unpaid Invoices
Unpaid invoices can be a major hurdle for your businesses.
When cash flow is interrupted, it affects not only your day-to-day operations but also your ability to plan for the future.
While it’s ideal to prevent this scenario with solid contracts and clear payment terms, sometimes customers simply will not pay.
In these situations, it’s important to have a plan of action in place so you can take debt recovery action to your benefit.
Here’s a straightforward guide to navigating debt recovery as a small business owner in the Southern Highlands from the amazing crew at Our Lawyers in Mittagong.
1 :: Keep tabs on your debts: Your first step is to have a clear timeline and reminder system in place, so that you know when an invoice becomes overdue.
2 :: Issue a Friendly Payment Reminder: When a payment is overdue, the first step should be a polite, non-threatening reminder. This could be a short email and/or phone call to check if the customer has received the invoice and gently remind them of the outstanding payment.
It could look something like this:
“Dear [Customer],
We hope you’re doing well. We wanted to remind you that invoice #[invoice number], issued on [date], is now overdue. Please let us know if there are any issues, or kindly arrange for payment at your earliest convenience. Thank you”
Simples!
This approach shows good faith, giving the customer an opportunity to pay without feeling pressured. In many cases, especially if the delay was unintentional, this may be all that’s needed to resolve the issue.
3 :: Offer a Payment Plan:If the customer gets back to you but says they’re having money troubles, it might be worth chatting about a payment plan. This way, you can still get paid while keeping things friendly. Just make sure to write down the details, like how much they’ll pay and when.
It might take a bit longer to get the full amount, but it’s often a better option than jumping straight into legal action, especially if they really intend to pay.
4 :: Send a Formal Payment Demand: If the friendly reminders don’t get a response or the payment still doesn’t come through, it’s time to send a formal letter of demand. This is a document that clearly lays out the amount owed, the invoice details, and a deadline for payment, usually within 14 days. It should also mention the possible consequences of not paying, like the risk of legal action.
Make sure the letter is clear and professional, and keep a copy for yourself. You might want to send it via registered mail to make sure they get it.
5 :: Seek Advice from your Commercial Lawyer: If reminders and a letter of demand don’t resolve the issue, it’s time to seek expert advice. Engaging a lawyer with experience in commercial debt recovery like the team at Our Lawyers ensures you understand your options and any risks involved.
For small business owners, Clarissa Follan from Our Lawyers is a trusted legal professional with experience helping businesses recover unpaid debts. She can assist you in assessing the situation and deciding whether to proceed with legal action.
Clarissa can also guide you through the process, from preparing a solicitors letter of demand and drafting a statement of claim to filing in small claims court, or even applying for a default judgment if the customer doesn’t respond.
6 :: Taking Legal Action: If the debt remains unpaid after these steps, your lawyer may recommend commencing legal action. For small debts, NSW has a Small Claims Division within the Local Court that handles claims up to $20,000.00. The process is straightforward and designed to be more accessible for small businesses without complex legal procedures. For claims greater than $20,000.00 (and less than $100,000.00), the claims can be heard within the General Division of the Local Court of NSW.
Your lawyer can help you issue a Statement of Claim, which formally starts legal proceedings. If the customer doesn’t respond within 28 days of being served, you can apply for a default judgment.
A legal professional can handle these steps on your behalf, ensuring all steps are completed properly and helping you navigate the complexities of debt recovery.
7 :: Be Proactive and Seek Help When Needed: While no business owner wants to deal with unpaid debts, having a clear strategy in place can save you time, stress, and money.
Start with friendly reminders and formal letters of demand, and if necessary, don’t hesitate to seek expert legal advice.
By proactively addressing and keeping the above items in mind, small business owners can mitigate risks; keep on top of outstanding debts; ensure cashflow continues; and position their ventures for sustainable growth.
Clarissa Follan at Our Lawyers is a passionate commercial and dispute resolution lawyer, joining the Our Lawyers team in March 2023. Clarissa can help you navigate the legal process, ensuring you recover what you’re owed without compromising your business’s growth or reputation.
Being proactive and getting professional guidance is key to keeping your cash flow on track. If you’re finding yourself struggling with payments from debtors, reach out to Our Lawyers and they will make sure your small business gets the support it needs.
A Leading Law Firm in the Southern Highlands
At Our Lawyers, our experienced legal team offers a friendly and personalised service to all of our clients, with every effort taken to ensure that we deliver results in all areas of the law. We understand the importance of individual attention, and so we are here to work with you every step of the way to ensure that your legal requirements are met. We strive to provide an approachable, client-centred, and successful service so that you can feel confident that you are receiving the best possible legal advice.
Our expertise covers a wide range of areas, including but not limited to family law, conveyancing, commercial law, wills and estates, and property law.
Our team of experienced lawyers will guide you through the legal process, ensuring you have the information necessary to make informed decisions. Our Lawyers have provided quality legal services to clients in the Southern Highlands for over 20 years. We are approachable, modern, and efficient.
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