What Documents Do You Need Before You Can Send an Invoice to Collections?

You need to prove that the debt is legitimate and collectible before you hand an unpaid invoice over to collections, whether through an outside business debt collection agency or your own internal process. Below are the main documents you need for that.

1. Outstanding invoice 

You must have the unpaid invoice itself. A good invoice should show the customer’s full business name and address, the invoice number, the invoice date, the due date, the total balance owed and an accurate description of the goods or services you provided. When an invoice lacks important details, tying the money owed to a specific transaction becomes more difficult.

2. Customer agreement and authorization to pay

You need proof that the customer agreed to pay in the first place. A signed contract or service agreement is the best way to do this, but there are other options as well. For example, approved estimates, accepted proposals, purchase orders or email threads in which the customer confirms the price and scope of work can all be considered valid proof. 

The main point is that the customer understood and agreed to the charges and the total cost. Your documentation can establish that the customer authorized the payment from the start as long as it makes those terms clear.

3. Documentation of completed work or delivery

You should also have records showing what happened after the parties reached the agreement. If you can document that you completed the work or delivered the goods, your case becomes stronger. This could include delivery confirmations or customer emails confirming receipt.

4. Payment and account history

Payment and account history records can establish a pattern of responsibility if the customer has made partial payments or otherwise acknowledged the balance. Copies of checks, ACH payment confirmations, credit card receipts or internal accounting statements are especially helpful here. 

All of these documents prove that the customer made payments on the account in the past and understood they owed money. A documented payment history makes it more difficult for someone to argue that the outstanding balance is invalid.

5. Records of previous collection efforts

You will want to gather anything that shows you genuinely tried to collect the debt yourself before handing it off to a professional accounts receivable management firm. That includes past emails, payment reminders, follow-up messages, formal demand letters and even notes from phone calls or voicemails. Basically, if you reached out to the customer and gave them a chance, you should document it.

If anyone questions the situation, these records protect you by demonstrating good-faith effort. And if you do bring in an accounts receivable management firm, a clear history of your previous collection efforts makes the process smoother.

Let Cash in USA help you get paid faster

Overdue invoices that tie up your cash flow and unproductive internal follow-ups can point to the fact that it is time to bring in outside help. Contact Cash In USA today to see how their team can turn your unpaid invoices into recovered revenue.