If you’re in business, you’ll have clients. Your cashflow is dependant on your clients paying your invoices on time and in full. Unfortunately, this doesn’t always happen. The Government is keen for organisations to pay their bills on time and have suggested that penalties could be introduced. The FSB have also calculated their own impact on small businesss due to late payments.
So let’s discuss what you should do when you are due a late invoice. You can often tell the calibre of the company you’re dealing with by how they pay their invoices. Late payments can be uncomfortable to deal with, but hopefully the tips below will help.
Ask for payment upfront (if you can). Once it’s paid, then you’re green for go to carry out whatever services you’ve agreed to. For the most part, clients will be happy to pay in this way. If you encounter a client who squirms at the request of paying up front then there’s probably an underlying reason why. Walk away.
Use a contract which detail explicitly what the terms are including late payment charges. Make the charges so high, no client will want to incur them.
When companies don’t pay, it’s usually a sign that a cashflow problem is developing. If you suspect that to be the case, contact the client with repeated requests for payment. Use email, telephone and even in-person visits. Often, those who ‘shout the loudest’ will get paid first so bear that in mind.
Here’s a video which you may find useful on dealng with late payments. Leave a comment if you found this useful.
Invoice Factoring (Update Jan 2017):
If you are a business and are having problems with late payment of invoices, consider using an invoice factoring company to help get the payment owed to you.