Having taken a look at the issue of late paying clients last week, it’s time to consider the worst case scenario: what happens if a client just won’t pay an invoice?
We’re not talking about late payments here as we already know that some big businesses will withhold payments for as long as they can. Often imposing their own 60, 90 or 120-day terms on their SME suppliers. While there are moves afoot to try and stamp out this sort of unfair practice in Australia, we suggest that for now, these clients are ideal candidates for regular invoice financing.
Sometimes, it becomes apparent that a client has no intention of paying at all. These generally fall into one of three categories: those who are unhappy with your product or service, or otherwise dispute your invoice; those who simply ignore all requests; and those who say they can’t afford to pay.
But first, let’s tackle the big question: What happens if a client refuses to pay an invoice you have used to raise finance through OptiPay?
OptiPaySecure™ to the rescue
Providing your business has acted within the law, OptiPaySecure™ covers up to 90% of the funding on a defaulted invoice. It can also cover the legal costs of chasing a debtor who failed to pay. With us, you’re covered.
Other invoice financing companies have different policies, of course. Some insist on insurance, others operate their own debt collection but may charge, and some might demand that you repay the money. It all depends on what you’ve signed up for.
One thing that will always be useful is if you can prove that you delivered the product or service, and show a set of terms and conditions that effectively constitute contractual terms.
If you’ve not used OptiPay to get the money owed to you within 48 hours and are still waiting for payment 120 days down the line, the time has come to pursue your client. If they are SME like you, who you have a longstanding relationship with, Jose Rivera of LegalMatch makes a good point.
He says: “Many small businesses operate with a limited clientele base, and a small number of business partners or affiliates. If a client or partner gets into debt, this needs to be handled carefully and with tact. You want to ensure that you’ll get repaid without sacrificing your network connection with the person or group.”
Can’t pay
If you know your client is genuinely struggling, then you have a difficult decision to make: do you risk losing a regular contract by aggressively demanding payment; or do you support them in the hope that they will recover and give you their business for years to come? Seeing as it may be hard to get your money anyway, it could be worth offering payment on instalments or writing off some of the debt.
Won’t pay
If someone is unhappy with your service, you’re going to have to sit down with them and resolve the dispute. Your state fair trading agency can help. They give very good advice on dispute resolution, such as these gems from the Australian government.
To maximise the chances of a successful dispute resolution you need to:
• Listen to your customer.
• Ask for documentary evidence to verify the facts.
• Understand your legal obligations – consult relevant laws and regulations.
• Negotiate face to face in a calm and professional manner.
Won’t talk
If you’re in the unfortunate position of facing a client who just won’t communicate over an unpaid invoice – or have exhausted all the reasonable options outlined above, you probably need to consider taking some sort of legal action. That’s a whole another subject in its own right. In short, you can either seek legal advice or lodge a claim with the Small Claims Tribunal, which is designed to be used by non-lawyers.
But beware, legal action is not a route to be undertaken lightly, and many a small debt has been written off by business owners who simply can’t face the time and hassle.
They probably had wished they used OptiPay
“Get Tomorrow’s Cash flow Today”
Who is OptiPay?
OptiPay, one of Australia’s leading business finance providers, has been dedicated to helping small business owners solve cash flow challenges for over a decade and has provided $1.5 billion in business funding to more than 500 Australian businesses. OptiPay specialises in modern financing solutions such as invoice factoring, invoice finance, debtor finance, and lines of credit. OptiPay’s mission is to support business growth providing liquidity in as little as 24 hours, ensuring they have access to tomorrow’s cash flow today. This rapid access to funds helps businesses maintain smooth operations and seize growth opportunities without the stress of cash flow constraints. At OptiPay, we believe that healthy cash flow is the lifeblood of any successful business. Our commitment to helping businesses overcome financial hurdles and achieve their growth ambitions has solidified our reputation as a trusted partner in the business finance sector. Whether you are looking to stabilise your cash flow, expand your operations, or navigate financial challenges, OptiPay is here to support your journey with innovative and efficient financing solutions.
