The waiting is the hardest part
Late payments have become a growing problem for many small businesses. A third of small and medium size enterprises (SMEs) still say that big businesses do not pay on time.
At any time, around £24 billion is owed to SMEs in late payments. Chasing overdue invoices takes time, but early chasing with a polite call or email can often produce results and build good relations with customers’ accounts departments. If your customers know you are quick to deal with late payment, they will be less likely to delay or ‘forget’ to pay. Encouraging electronic payment is useful because you do not have to wait for a cheque to clear – or to get lost in the post.
With persistent late payers, try to find out why they delay – you may be able to come to an agreement with them. Otherwise, demand interest on late payments – you are legally entitled to it.
It seems obvious that you should ensure you send out statements and invoices promptly, but sometimes busy periods or being left short-staffed can slow this process down. Nevertheless, you cannot expect to be paid on time if you fail to invoice promptly.
You should also have a clear set of terms and conditions to protect you from late or non-payment, and always run a credit check on new customers.