If you're a business owner, then you know that late payments can cause some serious cash flow problems. Not only are late payments frustrating, but they can also be damaging to your business. In this blog post, we will discuss the best way to chase late payments and why it should be a priority for your business.
The main reason people start up a business is to get some financial freedom, but if you have lots of late payments this can be an issue. In order to make your business a success it needs to be receiving a regular and consistent income to keep your cash flow nice and healthy. You’ve worked hard and you deserve to be paid for your efforts, so chasing payment should be a priority.
Many business owners find it hard to chase their outstanding debt and worry that they are coming across as rude, by asking for payment. This is not the case at all, you’re owed that money and have the right to give your clients a polite nudge if your payment has not been received in time.
If you need some help with getting paid here’s a process you should follow:
Set your payment terms upfront and get a deposit for work before you start
Look at credit checking new clients before taking them on
You are within your rights to charge interest on late payments but you need to warn your clients you do this
Send a statement and a polite email to your client showing any invoices sent in the month and if any are overdue. Some businesses do this at the end of every month.
If an email is overdue, send an initial email to the client to let them know and attach a copy of the invoice. Some accounting systems can be set up to do this automatically.
If you still have not received payment then you can send an email or letter reminder
Give them a call - be polite
Review their work and put work on hold until payment is received but keep the client informed.
If all this does not work then you can look to take legal action or use a debt collection agency
If you are claiming payment for £100k or less then you can look at Money Claim online which is proving effective for claims. https://www.gov.uk/make-court-claim-for-money/court-fees
If chasing payment makes you feel uncomfortable or you just need that extra support chasing debts then please get in touch. We can support you to get policies and procedures in place to make chasing payment much easier for you and to encourage your clients to pay you on time.
If you need help setting up your credit control policies and procedures or need someone to help get in contact.