There are plenty of valid reasons why you might not choose to chase a debt immediately – if it seems unlikely that the debtor will pay, and you are facing cash flow problems as a result, it is entirely understandable to focus your energies on simple survival in the short term.
Late payments are undeniably a major problem for many companies, yet many choose not to aggressively pursue overdue invoices due to concerns that it might harm relationships with prompt-paying customers too, or simply the view that it’s better to be paid late than never.
Proposals due to come into force in October ban ‘essential’ suppliers from cutting off business customers while they are in administration, in an attempt to give them more chance of being successfully rescued.
One of the main reasons why some people choose not to pursue an overdue invoice or other client debt is because the customer has been prompt to pay in the past and/or is ‘valued’ in some other way, such as a friend of the family or a customer who was important to the growth of your business in the early days.
In this article, let’s be clear first about what we mean by ‘unpaid invoices’. We are not concerned with regular invoicing and credit control, or collecting on-time payments, but solely with invoices that are still unpaid when the deadline for payment arrives.
Whenever a debt recovery firm enters liquidation there are bound to be problems, particularly if debtors have made payments to the firm that have not yet been passed on to creditors.