Get Your Outstanding Invoices Squared Away Before 2024 with These Tips

Outstanding invoices can be frustrating, especially when you’re trying to tighten up your books at the end of the year. An important thing to remember is that no matter how annoyed you are, staying professional is key.

Oftentimes there’s uncertainty around unpaid wages – there may be limitations on how long you have to collect them, the appropriate way to reach out, what you should and shouldn’t say in your outreach, and more.

Another fear many people have when invoices are outstanding is how it will affect their taxes, which can depend on the type of accounting method and the circumstances surrounding the invoices.

Accrual-based accounting recognizes income when it’s earned – ie. the invoice is out even though hasn’t been fulfilled but is still considered for income taxes.

Cash-based accounting only recognizes income when the money lands in your account.

Tax laws of course vary, and circumstances are different for everyone. Be sure to document your efforts in trying to collect outstanding invoices and talk to your tax preparer about what’s best for you and your company.

Adding more to your plate in December can feel overwhelming but there are a few tactics you can try before the end of the year to square away unpaid invoices:

Polite email reminders

Even if the client has been ignoring you for months, you still need to remain polite. Send email reminders from both your accounting software and your actual email address (download and attach the invoice and link it in the body of the email). Depending on what program you use, you should be able to see if your invoice is being viewed, when, and how many times.

Call them

Close the Instagram app, hit the green phone button, and call those clients. It’s easier to ignore an email than a phone call. If you have multiple contacts, keep going down the list until someone answers.

Incentives

There could be multiple reasons for an unpaid invoice – breaching a contract and just not paying, unexpected loss of funds, a change in management and it being overlooked, the list can go on.

If there is conflict when reaching out, consider removing late fees, any fees the client incurs for paying with a card, or provide a ‘thank you’ discount.

While that’s not the most practical tactic, it may help expedite getting the invoice fulfilled.

Negotiate a resolution

Falling on hard times can happen to anyone. The client may have felt embarrassed that they couldn’t cover the invoice, or needed to get their immediate staff paid first. If they’re willing to connect and find a resolution, consider allowing them to have a payment plan to catch up.

If at the end of the day, nothing is creating any movement, and the financial burden would be high without receiving the payment, consider taking legal action or obtaining a debt collection agency.