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One of the obstacles you’ll find as a freelancer is one of the past-due payments. Unfortunately, even when you do everything right in terms of invoicing, project management, and effective work, sometimes your client just won’t pay on time. This can probably mean that there are some financial difficulties on their part, waiting to receive compensation, or maybe an unexpected bill, and you’ll have to “pay” the price. But what can you do in the meantime.
First let’s look at what a past due invoice is, to make it simple a past due invoice, as the name suggests, is an invoice that hasn’t been paid by the due date that you and your client have agreed upon. If your payment was due on the 30th of September, but it’s the 10th of October, in this case, we’re talking about a past due invoice.
Many people tend to confuse the past due invoice with an outstanding invoice. As per the example before we can see that a past due invoice becomes one only after the due date agreed upon by both parties. An outstanding invoice still has to do with payment you haven’t received, but it just symbolizes money you still haven’t received prior to the due date in your invoice.
So we can say that an outstanding invoice becomes past due once the due date on the invoice is passed, and you still haven’t received compensation.
Now you’re going to wonder how can you make sure that you don’t incur in this situation, some of the best advice would be to compile a clear invoice for your client, and that’s where Indy comes in to lend a helping hand. With Indy’s all-in-one project management system you can create invoices with their templates, work out your contracts, write up proposals chat, manage tasks, and share files with colleagues. It’s a great way to upgrade your freelance career, without room for mistake when it comes to invoicing or any other logistical aspect of your freelance career.
With a streamlined workflow, there is less room for mistakes when sending out important documents to your clients, and without any typos, you won’t have to worry about past payments.
Do keep in mind that sometimes clients might be in a tight spot when payment is supposed to occur, an emergency could happen and they need to move some funds or risk losing their business. Patience in this aspect is a good way to build a good and long-lasting relationship with your client. Ask them politely if something is wrong with your work, or with the business, and reassure them that you are fine with waiting a little more. Especially if the client in question was always on time with payments. In the case where this is a new client still be gentle, but it might be a red flag that they aren’t as reliable as they led you to believe during your interview process.
The process of creating past due invoices is fairly simple, if you don’t use an automated invoicing system like Indy, you just need to change the label on the invoice. Add a label on the top of the invoice that reads “Past Due Invoice” and you can send it out.
Now if you are using a system like Indy you’ll find that it will automatically label your invoices as past due, once the due day has passed.
But what can you do to prevent having to create a past due invoice, because why would you want to get to the point where you have to run after the money that is yours as per agreement.
Every time you find yourself with outstanding payments and the due date for those payments is inching closer, send your client a friendly payment reminder. Let’s say a week prior, this way if they had a busy schedule they won’t forget that your payment is coming up.
Another way to make sure you get paid on time is to give a diverse set of payment options to your client. Maybe their bank is slow with wire transfers, so why not use PayPal or Stripe, which have a have faster payment infrastructure, compared to a mailed check or a wire transfer. Coming to agreements with a client is the best way to ensure smooth payments.
In some cases it’s good to establish some type of past due to fees, now this is something you and your client have to decide while you’re presenting them with a contract, rather than showing up out of the blue. Because that is a good way to ruin a client-freelancer relationship. These fees aren’t the same in every field, nor in every state, so it’s best to do some research and see what your colleagues are doing before proposing it to a client.
Once the past due invoice has been generated on Indy, or by yourself on your invoice editing program, you’re going to need to use the past due invoice to receive the money that is owed to you for the work done. When a project is done and delivered there are few things that can be more frustrating than having to use a past due invoice, but it’s bound to happen.
Luckily if you use Indy’s platform as soon as an invoice is past due you’ll get notified and you’ll know with whom you need to get in contact for the late payment. You’ll know if you had any late fee agreements, as the contract will be in the same area, and you might receive higher compensation for your patient. Hopefully, you don’t incur in a client that has decided not to pay you even after agreeing through a signed contract, because in that case, you might need to go through a mediation process, that might settle the dispute. With the help of a professional in the field to handle all miscommunication, you might find that the solution was easier than you ever imagined.
After mediation comes legal action, but that is to be used only as a final straw, you don’t want to ruin your reputation as a freelancer. Obviously, if you feel taken advantage of by a client then you can see counsel for arbitration, small claims, or superior court claims. But keep in mind to consult a specialist if you are thinking about going down this route, as we aren’t legal specialists.
If you don’t feel like going through a legal war with a client, the best thing to do is send a couple of reminder emails, which we’ll see below.
You’ve come to the conclusion that you need to send a reminder to your client regarding a past due invoice that hasn’t been paid yet. Prior we looked at some of the more extreme ways to receive the payment, but let’s look at what are the first things to do when you are about to send a past due invoice to one of your clients.
If this is the first time it happens you might be pretty frustrated with the client in question, don’t be there could be a million reasons why they are late with their payment, and most of the time it’s just a random event that has occurred to them. It rarely has to do with malicious intent on the part of the client.
So what is your first step? Make sure you start off and kill’em with kindness, don’t start off with a strong-worded email, make sure the tone of voice in your first email is friendly. Make sure that you don’t give your client more to stress about because they might be stressing for other business-related reasons that might have had them forget to send out your payment. Once they read your friendly reminder they’ll probably get around to send you the money immediately.
Write something along the lines of
I hope everything is going well on your part.
I’m writing in regards to invoice number XXXX that I still need to receive payment for, which was due on XX/XX/XXXX.
Let me know if you need some more time,
Let’s say that the situation escalates and your client decides to use your kindness against you, they tell you that they’re in a conundrum and need more time, but another month passes and you still haven’t received any payment. In this case, you can send a nice strong worded email, with all the pent-up stress you had to hide in the first email you sent.
Here you can write something that reminds them that they need to pay as soon as possible or that you will have to take further action to ensure your payment. If they don’t answer try calling the office and see what the problem is, maybe your contact doesn’t work there anymore and you just need to be redirected to someone else that will ensure you receive your compensation.
Remember that sometimes one instance of miscommunication, can cost you a late payment and a whole lot of stress, that’s why you should use Indy’s platform to run all of your accounting operations smoothly. Make sure you have everything under control with Indy and you can spend most of your time on projects that need to be done, respecting quota and deadlines to ensure that every other client you have pays you on time, and you won’t need to worry about past due invoices.
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