What if your client doesn’t pay the invoice?

You have worked so hard to close the deal and then your customers don’t pay. So how do you recover your unpaid software invoices? An Deraemaeker co-founder of Justified joins the show to discuss everything you need to know how to get your invoice paid.

Listen to the podcast or read the full transcript below.

How to get your invoices paid?

Michael Humblet:
Welcome to the Sales Acceleration Show. My name is Michael Humblet and I’m the founder of Chaomatic. And in this show we discuss all topics, sales and marketing. But this one is special because what happens when you’ve done the sales and all the marketing and you’ve actually closed the deal and then you send an invoice, but the invoice does not get paid? So I’ve invited An and she will go in detail through what you do next?

Michael Humblet:
So Anne, explain to our viewers what you do.

An Deraemaeker:
Yes. Hi, I’m An from Justified. So basically we help all entrepreneurs to recover their unpaid invoices quick and easy. So that’s where we stand for.

Michael Humblet:
Very good. So typically what happens is I send out an invoice, let’s say 30 days, let’s make life easy, 30 days and then nothing happens.

An Deraemaeker:
Yes.

Michael Humblet:
So what do I do?

An Deraemaeker:
First of all, it’s very important that you send a reminder, written reminder to your clients-

Michael Humblet:
Email is good?

An Deraemaeker:
Email is good. A registered letter is recommended-

Michael Humblet:
Immediately?

An Deraemaeker:
No, first of all, you can send emails, you can have a call. Basically it depends on your culture as well. How do you go on with your clients.

Michael Humblet:
I see a lot of companies, not corporates, but a lot of companies where they’re smaller and they’re like, “Yeah, but if I do this then my customer would get upset.”

An Deraemaeker:
Yes.

Michael Humblet:
So that’s why, for instance, in many cases I advise start with an email before you do register the letter. Right?

An Deraemaeker:
Yes, of course. I think the best way is to indeed first of all do it the gentle way. So send an email or pick up the phone and just ask them to pay attention to the invoice.

Michael Humblet:
Isn’t an email better because it leaves a trail?

An Deraemaeker:
Well, in the end, what’s most important, when you take for your steps that you can prove that you have sent a reminder. So in that way an email is better because you have really proof and therefore I would say a registered letter is safer, but it’s not… Yeah, it’s recommended, but you don’t have to send it.

Michael Humblet:
One of the things they told me is that if the company that you’ve sent the invoice to doesn’t complain within 10 days, it’s fine, they’ve accepted the invoice. Is that something true or is that..

An Deraemaeker:
Yeah, I know that that’s something that’s going on in the world, but no, it’s not true.

Michael Humblet:
So ultimately bad again.

An Deraemaeker:
Yeah, I’m afraid so. It won’t work in courts, for sure.

Michael Humblet:
So they don’t pay, I’ve sent them an email, I phoned them up. What are the options? What can I do?

An Deraemaeker:
Well, basically you have four options that you can go to. First of all, you have an [Ingaso 00:02:45] agency. They will send a couple of reminders and they will try to get your invoice paid.

Michael Humblet:
And you pay them a percentage?

An Deraemaeker:
Most of them work with a no cure, no pay rule, but in the end if they can’t get any further, they will have to work together with a bailiff, which is also known as a [characterizer 00:03:06] amongst the Dutch speaking people. Then secondly, you can go to a lawyer, which also will send a reminder in his name, which has a little bit more pressure to it and he will also represent you in court when it’s necessary.

An Deraemaeker:
Then the third option is a bailiff. So a [inaudible 00:03:27]. He will also send a reminder and they will also do the execution once you have a judgment from court. And then the last option is a factoring agency and they will basically buy your unpaid invoice for smaller amounts and then they will try to recover it through the three ways I’ve mentioned before.

Michael Humblet:
And what’s the fastest? Because, I mean, I’m listening and I’m thinking this is scary stuff if I send out an invoice for 2000 Euro, it’s going to cost me more. Right?

An Deraemaeker:
Yes.

Michael Humblet:
Okay. So let’s ignore the corporates for now because that’s a machine that’s running, they’ll do it for 50 bucks. I get it. So what if I’m somewhere in the middle?

An Deraemaeker:
Well, actually there’s one right answer to that.

Michael Humblet:
I was afraid you would say that.

An Deraemaeker:
Yes. That’s the way. We did a lot of research to it lately and we discovered that the best way to decide which is the best recovery party for you is not based on your own situation but on the situation of your debtor.

Michael Humblet:
The other side.

An Deraemaeker:
Yes. So each of the parties have their own way of working and they have their own cost structure and it’s not logically to paint them all with the same brush as you might say. So actually you have to really look into the debtors’ situation to decide which of those options will be best for you.

Michael Humblet:
And is the one faster than the other or more expensive? I mean, court is the most expensive one clearly, because a lawyer, I mean…

An Deraemaeker:
Well, I have to go back to my previous answer that it all depends on your debtors’ situation. You really have to see which are the steps that I have to take for him to pay and which can I leave out. And it’s hard to know upfront and that’s where we come in and we’re specialized in making that decision, to make sure that you don’t make any steps that are not obliged to do so. And also then we can make it shorter.

Michael Humblet:
What are the things that we should for sure prepare if we go there? We have thinking about is… Are there things I need to prepare properly? Of course the right contact, the right name. Is there specific things I need to think of?

An Deraemaeker:
What we basically need is your invoice. So with all the information, which should be there.

Michael Humblet:
Anyway.

An Deraemaeker:
That’s the rule. Yeah.

Michael Humblet:
So, let’s go back to that. Maybe very basic. Is there something that for sure… I mean, what should be on the invoice to be 100% safe?

An Deraemaeker:
Yeah. First of all, the address of course, the name of the company, the contact person-

Michael Humblet:
It should be on there because I’ve seen a lot of invoices go to accounting.

An Deraemaeker:
It’s easier when you have a contact person, but it’s not necessary.

Michael Humblet:
It’s not necessary.

An Deraemaeker:
If we have an address really need the company or person that it’s not… Of course, if talking about a company, if it’s for a consumer that’s different story. Then you need an [crosstalk 00:06:33]-

Michael Humblet:
B2B, yeah.

An Deraemaeker:
Yes. But in the B2B context you just need an address, the name of the company and preferably also the vat number.

Michael Humblet:
Yup. Description of what it is or can there be a code that not really…

An Deraemaeker:
For the parties that will work with it, that’s not necessary, but for yourself, it’s of course good to have it on there.

Michael Humblet:
A PO number? I’m just naming all the stuff because I dealt with a very large corporate and of course they give you a PO number and then you’re really clean, but that’s not needed.

An Deraemaeker:
Nope, not necessary.

Michael Humblet:
No.

An Deraemaeker:
Nope, not at all.

Michael Humblet:
Okay, so I’m looking at Peter, we are on the safe side here. Right.

An Deraemaeker:
And what’s also very important or that’s an advice I would give is to have well-considered general terms and conditions, because I notice that’s something that a lot of entrepreneurs lack these days. And basically it’s very good to have a damaged clause in your general terms and conditions as well to include it there.

An Deraemaeker:
That way you can basically already have some of your recovery costs covered by that.

Michael Humblet:
So it’s not penalty, but it’s damaged claim.

An Deraemaeker:
Yep.

Michael Humblet:
Okay.

An Deraemaeker:
Yep. So I would say if you would add a 10% of your invoice with a minimum of let’s say 75 years, then you’re safe. That’s a very good guideline for that. And I will add to that as well, if you can make those general terms and conditions mutual, meaning that when you like to deliver, then your clients have the same rights. And that’s also good because when it will come to court eventually, then you have a much more chance that it will be granted to you as well.

Michael Humblet:
One of the things that I see also is that a lot of companies, they send an invoice, that they do a service, but they don’t have a signed offer or something. So when they send the invoice, in essence it means the terms and conditions are the ones on the invoice. Right? So I don’t need an upfront sign terms and conditions document and everything, or of course it would be better to have it, but it’s not essential.

An Deraemaeker:
It’s not essential. But of course it’s always better if you have a signed-

Michael Humblet:
My dear friends, you, it’s better to have it upfront signed.

An Deraemaeker:
Of course.

Michael Humblet:
Exactly. The corporates will never-

An Deraemaeker:
And you’re more safe anyway.

Michael Humblet:
Okay. So, I have the four options. I go there and if things really… How much time will it take in average? Of course it depends on the legal system and all of it, but is it weeks, days, months?

An Deraemaeker:
It’s really hard to say because once again, it depends on the situation of the debtor and if he can pay or not. But I would say for six months, that’s general.

Michael Humblet:
To get your money.

An Deraemaeker:
Yeah.

Michael Humblet:
Scary.

An Deraemaeker:
Yeah, it is of course. And it’s just, yeah, an idea. It can differ every time and it’s very hard to put a real number on it. But if you do it via the right party, it can be shorter, of course.

Michael Humblet:
So, some final advice you have? You say…

An Deraemaeker:
Half. I think as final advice, I would say first of all have a well-considered general terms and conditions. It’s very important. Also make sure that you have sent a written reminder.

Michael Humblet:
Traceable.

An Deraemaeker:
That’s very important as well. And thirdly, choose the right recovery party for your unpaid invoice. You can do it via Justified, of course.

Michael Humblet:
Of course.

An Deraemaeker:
Otherwise, it’s very important just to have a partner that you trust but also one that is very transparent in his way of working and who can really tell the steps that you’ve taken and so you can follow from a distance. I think that would be a good advice from my side.

Michael Humblet:
Perfect. Now every guest that gets into my show, I ask them the same few questions at the end.

An Deraemaeker:
Okay, shoot.

Michael Humblet:
So the first one is, so where do you get inspired? What do you read? Where do you go for blogs or websites? Where do you get your information?

An Deraemaeker:
I think what inspired me the most is other entrepreneurs, when you’re talking to them, because each entrepreneur has his own story and it’s very inspiring to hear how they do it, what they struggle with. So through networking and through working together with a lot of people, I think that is my biggest source of inspiration. Of course, reading a lot of books. I think, for our firm, we heard a lot about The 4-Hour Workweek.

Michael Humblet:
Of course.

An Deraemaeker:
Yeah, it’s really inspiring and it gave us a lot of inspiration on how to handle the things, and yeah, that was a nice one to read. But most of all, I think, yeah, other entrepreneurs that are most inspirational to me.

Michael Humblet:
Okay, perfect. So there were so many moving parts, especially when you’re starting and everything’s moving. So how do you bring focus?

An Deraemaeker:
That’s a very difficult one, for sure.

Michael Humblet:
I know. That’s why I’m asking it.

An Deraemaeker:
Yeah, there are a lot of things that you want to do and you’ve had a lot of hats on and making decisions all the time. I think what works best for me is really prioritize the things that you really want to do and the things that you think are a nice extra. And with every idea that we have, we really put a mark on it. Like, “Okay, is this really something that we need to do right now, or do we put it somewhere in the future and just make sure that we don’t forget it, that we don’t put our focus on for the moment.”

Michael Humblet:
Yeah.

An Deraemaeker:
But it’s very difficult to do.

Michael Humblet:
I know. So very close to that is how do you say no to the things you do not want to do?

An Deraemaeker:
I think that’s the same way. Always thinking like do we really want to do it? If it’s for ourselves really like is it something that we need to do and we need to do it right now, then we say yes. And otherwise, you know, “Okay, it’s-

Michael Humblet:
And how do you say it? Do you just kind of… A lot of salespeople that are in the show, they say, “I kind of say yes, but I mean no and kind of push it away.” Or you actually bluntly say…

An Deraemaeker:
I think we really would say it, because we really have a vision that we want to help other entrepreneurs and we can only help them by being honest. So if we receive, for example, an invoice that we know the chances are very low, we will also say that. And like, “This one is… We advise to to stop it and to make no further costs.” So in that way we would just say no to them. And I think that’s very important and it’s some kind of a philosophy, I think, to do it that way.

Michael Humblet:
So, what’s your, at the moment, I mean, what’s your biggest failure up to now where you said, “That’s something I will never do again?”

An Deraemaeker:
Whew. That’s also a tough one. There are a lot of things that pop into mind, a lot of learnings that we had. I think the most important one is when we have to work together with partners to be a little bit stronger in deciding with who we should work with. Ask a lot of questions and really-

Michael Humblet:
So you can say no.

An Deraemaeker:
Yeah. And really think about, “Okay, do we share the same culture and the same idea?” I think that’s very important because then you can find each other. When you lack that it will be a struggle in the end. So I would say make sure that you’re on the same line before you say yes.

Michael Humblet:
And then final one. Where can people learn more about your company?

An Deraemaeker:
For sure on our website.

Michael Humblet:
That is?

An Deraemaeker:
www.justified.be. We will also post a lot on LinkedIn, and you can always make a connection with us on LinkedIn as well. And we are more than happy to answer all your questions that everybody might have regarding unpaid invoices so.

Michael Humblet:
Super. Thanks for joining this show.

An Deraemaeker:
You’re more than welcome. It was fun.

Michael Humblet:
And now that you know how to get your unpaid invoice paid, actually, you know exactly what to do, if you like what you’ve heard, give it a thumbs up and subscribe for a lot more shows coming your way. Thank you for watching.