When a contract job is done, it must be paid — it’s as simple as that. However, as a freelancer or self-employed individual who completed the work, you won’t see any money until you raise an invoice. Do you know many clients begging counterparties to take their money? We don’t know any! That’s why it’s the seller’s/provider’s responsibility to issue an invoice on time and get a reward for their products or services. But when is “on time” exactly? Can an invoice arrive too late? Is there a time limit to send an invoice altogether? We’ll explore these questions below.
The Best Time to Put Out an Invoice
No business wants to wait to get the payment they deserve for a well-done job. If you want to see money on your account ASAP, you should get an invoice out in the same manner — which means ASAP. On the other hand, business etiquette encourages service providers not to rush too much so as not to seem desperate or greedy. That’s why it’s a good practice to wait a few days before claiming your reward. These few days won’t be enough to erase the details of the deal (and the amount due) from your and your client’s mind.
A Time Limit to Issue an Invoice
Certain circumstances don’t let businesses raise invoices after the work is done, for example the transfer to new software, document loss, and even simple forgetfulness. Does this mean that you should say good-bye to the hard-earned money? Not at all.
If you notice an unclaimed debt several months after it arose (i.e. upon the provision of a product, service, or completion of work), you still have a chance to get paid. The specific time limit to send an invoice depends on your jurisdiction and the terms of the deal. In the UK, for instance, you can pursue debt within six years after it has occurred. In the US, the statute of limitation sets a two years time period for oral contracts and four years for written ones.
That being said, in order to be eligible to claim the money, especially if your client says it doesn’t remember owing you anything, you must have proof that goods or services have been actually provided. A purchase order number, certificate of completion, signed delivery note, and other such documents won’t let your debtor dispute the debt.
How to Raise a Late Invoice
Let’s say you forgot to send an invoice within a reasonable time but eventually you remembered and decided to claim it now a few months later. The rules of business etiquette in this situation are to contact the client, apologize for your omission, and remind them of the debt. Most likely, the other side doesn’t remember that they owe someone something. Ask them to check papers or/and accounting software on their side and confirm that the deal really took place but it wasn’t properly closed. After your client gives you the green light for raising an invoice, then do so as quickly as possible.
If a client claims that it never heard of any debt, issue an invoice anyway but do not forget to attach supporting documents. If you do not see the money on your account after doing this, you’ll have a reason to go to the Small Claim Court.
Some business owners believe that they’re entitled to late payment compensation for overdue invoices. This is true if the delay was due to the fault on the client’s side (for example, if incorrect billing information was provided). However, if nothing prevented you from issuing an invoice on time and for some reason you didn’t do it, you shouldn’t seek compensation for your own oversight.