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Dealing With Unpaid Invoices: A Freelancer’s Guide in Spain

Law and Tax ChangesEntrepreneur

unpaid invoices

Many freelancers have unpaid invoices they have to claim frequently, and it seems the client will not pay. If it has happened to you, you know that two problems come.

The first, the invoice is going to be uncollected. Second, since you already accounted the income for, you are going to have to pay the Treasury for those non-existent benefits. We will tell you below what you can do.

1. Requirements to deduct the debt from unpaid invoices

Do not be overwhelmed, all is not lost, you still have a hope to partially remedy that loss. The Treasury allows you to deduct the debt as an expense when certain circumstances occur:

  • That six months have passed from the expiration of the obligation.
  • That the debtor client is declared bankrupt.

  • That the debtor client is being processed for a crime of lifting assets.
  • That the debt has been judicially claimed or is the subject of arbitration proceedings, the resolution of which depends on the collection.

Simply under one of these circumstances, the unpaid amount can be deducted as an expense. In other words, if the client is in bankruptcy, for example, this expense is deductible even if six months have not passed since the obligation expired.

2. Exceptions to the rule for unpaid invoices

But like any rule, it has its exception. There are certain circumstances in which, even if the above requirements are met, you will not be able to deduct this expense. These circumstances are the following:

  • If the debt is secured by public law or credit entities.

  • If the debt is guaranteed by real rights or by credit or surety insurance.

  • If you have renewed the payment obligation with the client. You would have to wait for six months to pass without charging from the new expiration.

3. What to do in case of non-payment?

First of all, it is very important that you indicate on your invoices the method and period of payment. We recommend that the period is not greater than 60 days, in order to have a margin to act.

  • The first thing you should do is to contact your client and see if there was any kind of error or misunderstanding. Don’t think the worst right away!

  • Your client may tell you that he can pay the bill, but right now, he lacks liquidity. Try to give payment facilities, for example, agree to an instalment payment of said invoice or exchange of services instead of money.

  • There are cases where customers act in bad faith. They have no intention of paying you. If you provide your services through the internet or it is about the shipment of a product that is still in process, you can cancel them and thus block access to them by this client, warning him in any case of it. If the amounts are important, put it in the hands of lawyers, because when someone does not act in good faith, it is very difficult to enforce their obligations without judicial intervention.

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