Granted, sometimes prompt billing is not possible — perhaps a job has not been closed out or a partner has not submitted his time — and an invoice (or two) falls behind. Regardless, you should always aim to invoice in a timely manner as late billing can hurt your business.
Here are three ways delayed invoicing can hurt your business:
1. It interrupts cash flow. When you bill late, you get paid late. When a client, or former client, receives an invoice months after the service was rendered, it is often viewed as a nuisance — unless the client needs your services again. If they don’t, then it may get lost in a pile or the circular file (aka the trash can).
2. It negatively affects the client-vendor relationship. When a client receives bill late, they may begrudge the vendor for not billing in a timely manner. Sometimes late billing can lead to a dispute, even if there wasn’t an issue with the services provided, because the client can no longer remember which services were performed, or why they were needed in the first place.
3. It can affect the outcome of future debt collection litigation. In a suit to recover a long past due balance the debtor may have a valid defense — one not based upon your performance or their reason for non-payment — if the invoices were not sent in a timely manner. By using this defense, known as the ‘defense of laches’, the debtor can say that the creditor’s delay prohibited their ability to find witnesses or evidence necessary to provide for their defense.
Don’t let late billing prevent you from getting paid. For more information regarding your rights to payment, contact Frank, Frank, Goldstein & Nager P.C..