How do you collect unpaid invoices in Dubai? When you have completed work that clients are happy and satisfied with, they’re to pay for the services that they have received within a time frame that is reasonable for all parties involved. This is exactly how wheels of commerce have turned for millenniums.
The issue comes when it has been several weeks past the usual payment term agreed by parties, and you, the seller, still have not received any payment. In such cases, clients are now wasting everybody’s time, especially yours as you are made to chase payments for unsettled invoices where money should be already in your account setting.
Having a cash flow that is considered healthy is the key to survival, as well as the success, of a business. It is, therefore, absolutely important for a business in Dubai to know exactly how to tackle unpaid invoices and late payers as the issue continues to arise. In this article, we will provide you with tips and strategies you can implement in order to manage debt collection and get the payments you’re owed while maintaining excellent business relationships with clients and customers.
Tip #1: Remember that it is not rude if you collect debts from clients.
As you become even more experienced in managing a business, you’ll come to understand the fact that debt collection and recovering debt are part of the entire course. It can feel very rude if you are contacting your clients to ask them for payments for debts. Remember that it is not rude and you have done the work already. The client is fully satisfied and happy that you have delivered, which is why you are entitled to be paid on time. If your clients do not abide by the terms of payment agreed, it is now the clients that are being rude.
Tip #2: Expectations for payments have to be set early on in a transaction.
No one likes talking about money or debts; however, settling the expectations of a client through a clear discussion regarding the payment terms early in a transaction can prevent a lot of issues down the road.
Explain when the invoice will be sent to a client and the terms for payments. Most small businesses and startups tend to stick to a 1-month payment term. For larger businesses, they will be happy in providing a 60-day allowance for settling debts. There are also other companies that ask for a certain portion of the cost to be settled upfront.
Tip #3: Remind clients of the interest charge if they pay late for invoices.
Government legislation introduced recently allows businesses, including financial institutions, in charging interest for late payments of debts. Debt collection in UAE involves certain expenses and the costs may be passed onto clients.
If you have not agreed when money will be settled by the client, payment will become late following the due date if the allowance isn’t stated in the contract between the client and the seller. Of course, the following has to be established first:
- The customer has already received the invoice
- The services or products have already been delivered
Take note: it is advised to provide a warning to clients on interest charges if invoices aren’t settled on time.
Tip #4: Send a polite reminder to clients instead of arguing with them.
When a payment isn’t made on time or as agreed, there is the temptation in thinking the worst and to instantly assume a client is making an attempt at getting away without settling debt. This is not the case most of the time. More often than not, a client simply forgot to pay. The best thing you can do for debt collection in Dubai is to wait a few days following the due date of the payment and send a polite reminder.
Tip #5: Give the client a letter of late invoice.
Apart from the reminder, you should also send clients that owe your business money late invoice letters that are written in the appropriate manner. You can simply state that payment has become overdue and prompt payment is advised. Something that’s as simple and straightforward as the following will suffice:
‘Good day, Karen!’
I would just want to let you know invoice #12 has become due for payment. I would appreciate you settling the balance at the earliest date possible. I have reattached the unpaid invoice for your convenience and reference.
Tip #6: Provide the client with an Outstanding Cost Statement
If no payment has been provided by the client even with the polite reminder and late invoice letter that was sent, plus you didn’t get a response asking for a quick extension, then you should send another letter or email. With the new letter, explain that the unpaid invoice has now become overdue. Include as well an Outstanding Cost Statement.
The email has to be polite and friendly in its tone of voice. At this point, you’d also want to consider reprioritizing the workload of your staff members. For clients that still have work outstanding but haven’t settled payment that’s overdue, but the outstanding work at the bottom of the team’s to-do list. It is, after all, very counterproductive to complete even more work when you are not sure you will get paid for.
Tip #7: Call the client in order to collect the debt.
It is a lot easier for a client to ignore a letter or email compared to dismissing a request that is made through a phone call for payment of unpaid invoices. If you have followed all the tips we have mentioned earlier and you still have not gotten any response or received the money that you are owed, there is a need to talk to the client and ask if there is an issue regarding the payment.
It can be that your client is experiencing some issues with cash flow and wants extra time in paying. Putting the client in a position that he/she is able to explain the situation will provide you with a much clearer picture as to the intention of the client. You will then be able to make a decision on the next step or course of action.
Tip #8: Continue making an attempt at recovering debts.
If your client still does not pay, you have to continue chasing the client. Of course, you should not allow the debt recovery process is consuming your life and taking too much time from your working day; however, there is a need to ensure that your client knows you’re not willing in letting the debt lie.
If payment for the unpaid invoice is promised, then make sure you ask for the exact date in which it will be done. Also, it is absolutely necessary to stop all work for a client that hasn’t paid an outstanding invoice.
Tip #9: Consider taking legal action.
There may be a need for you to take more drastic action if you have done all the strategies mentioned above and you still haven’t been paid. The failure of an individual or business entity in complying with an obligation will give the seller the right in pursuing legal action in order to compel the debtor in paying the money that’s owed.
Tip #10: Consider sending a Statutory Demand.
You can also engage with a reputable firm that provides service for debt collection in Dubai. However, prior to commissioning their services, consider first sending a Statutory Demand. This offers the debtor eighteen days in resolving the issue otherwise the debtor has to pay in full the amount that is owed within twenty-one days.
It is best to hire an agency for debt collection?
Agencies for debt collection in UAE like HHS Lawyers are responsible and organized. They’re able to take on the hard work of debt recovery for you, most especially for tricky situations. If you hire a seasoned firm, you will have experts with a rigorous standard or protocol and decades of experience to help you get the job done.
Charges can differ between debt recovery agencies in UAE and they can ask five to fifteen percent of unpaid invoices as fees for services. Many also operate on a basis of no collection, no fee. This means businesses get the guarantee that they are hiring experts that want to deliver.
Unfortunately, debt recovery or debt collection from clients and customers is a process that takes a lot of resources, especially time, out of a business. This is not even considering the fact that there’s an increased level of frustration and stress with dealing with issues on a day to day basis. A business owner has to focus on aspects of the business which facilitate growth. This is why it is best to have experts do the debt recovery, so you will be able to maintain a strong position for cash flow.