Unpaid invoices are a nuisance for any business owner. After working so hard to deliver your product or service, you don’t want to be spending months chasing after the money you are owed. Chasing unpaid invoices is sadly something that everyone will have to do at some point or another, but you may be wondering how long you can continue trying to secure late unpaid invoices. Keep reading as we discover the key things to keep in mind when it comes to chasing unpaid invoices to ensure you know how long you can continue trying to get the payment you deserve.
How Long Do Unpaid Invoices Remain Valid For?
You may think that you only have a few months to chase up unpaid invoices, but that isn’t the case at all. In the UK, unpaid invoices will remain valid for six years, giving you plenty of time to try and obtain the money you are owed. The 1980 Limitations Act protects companies in this way but states that you must try to chase up the money and settle the invoice by this time. However, if a company admits the debt and acknowledges it to your business, then you could even extend the invoice past this time. While we truly hope that you will never have to chase unpaid invoices for this long, you’ll find that you have plenty of time to try and go back and claim the money you haven’t been paid.
The type of invoice that you issue will dictate how long the other party has to pay the invoice. As a business owner, it’s up to you to set clear terms of payment for your invoices, so that you don’t have issues with the other parties you are working with. Consider adding a warning or penalty to the bottom of each invoice, so that clients know what will happen when they don’t pay on time. This will also make them far more likely to pay you in a timely manner, and they will know until what time they can contest the invoice if there are any issues. Our team will be here to support you if you are dealing with unpaid invoices and can share with you good invoice templates to help avoid these issues in the future.
How Long Should You Give a Company to Pay an Invoice?
While you no doubt want to receive the money you are owed, you need to be mindful of not hassling anyone who you’ve worked with. Although it can be frustrating not to be paid on time, remember that you also want to offer good customer service and build trust with your clients. If you hassle them too much and too early on, they are more likely to never return to your business again in the future.
If no payment date is added to an invoice and no discussion was held between the two parties, you should pay an invoice within 30 days of it being received. However, as a business owner, you can set your own terms for payment. Just make sure you are very clear about what you expect from your clients when it comes to payments, as this will help you to avoid late unpaid invoices.
Many companies try to incentivise people to pay early by offering discounts and the same can be done for large orders. It’s a good way to help yourself out during more challenging times, such as during the recent pandemic. The main thing to remember is that you need to be very clear in all of your communication to avoid late payments. This will help everyone to understand the expectations you have set for overdue invoices, which is something no business owner wants to deal with. Chasing unpaid invoices is a very tedious task for anyone, so the fewer times you have to deal with this, the easier your life will be in the future.
As you can see, you have a lot of time to chase unpaid invoices, but as a business owner, you want to do everything you can to make the terms of payment very clear with your clients. The sooner you set out the payment terms and make a clear invoice template to use each time, the less time you’ll spend in the future chasing unpaid payments. This can help to make life running your business much easier, allowing you to stay on top of your finances no matter how challenging things get. Our team will be here to support you with unpaid invoices and can share with you our top tips for avoiding this issue in the future. Get in touch with us today on 0330 229 1991 or email memberbenefits@directroute.co.uk to learn how we can assist you to make this year your most profitable one yet.