How to deal with a client that always pays late

Most businesses have experienced the worry and inconvenience of a client that always pays late. Short of ditching the client (and we are perfectly comfortable with advocating that as a tactic), there’s no rapid solution to the problem. But you can improve your chances of getting paid if you subtly change your credit control processes.

In this article we will explore a few easy ways to help you manage those 'tricky' clients and the excuses they use to delay payment beyong agreed credit terms.

Here are the key tactics at your disposal:

Check clients’ credit reports

You don’t have to extend credit to clients. If you decide to do so, check their credit report first. We work with market leaders Experian to offer a package of 99 credit reports for £99; a worthwhile investment before a new project begins.

If a client is already in financial difficulty or has a history of non-payment of CCJs, don’t build up large invoices and consider asking for payment upfront. Some clients may not be happy about paying a percentage or deposit before the project starts. However, any client that isn’t fully committed should cause alarm bells to ring.

Payment terms must be clear

Businesses are free to set their own payment terms, although you’ll need to be pragmatic to have a realistic chance of compliance. A term of 30 days is generally accepted as the norm, but you can vary this if your client agrees.

If you aren’t yet giving out a contract or terms and conditions, start doing so as soon as possible. Outline your payment deadline, and ask new clients for the details for the finance department so you can send invoices to the right person. Also, get a signature on your agreement so that everyone is committed to the terms you set.

Send reminders when invoices are due

The faster you act when an invoice is due, the better your chance of being paid. On the day after the due date, send a reminder. Some accounting software will do this automatically if you tend to forget key dates.

Always follow up reminders with a telephone call, so the client knows you expect to be paid promptly. If you don’t feel comfortable pushing for payment, hire a virtual credit controller to help.

Reward prompt payment

Many businesses have a culture of pushing invoices over their deadline. If you work with medium and large businesses, you may battle this month in, month out.

A discount could encourage your late payer to prioritise your invoices and avoid pushing them later and later. If your margins allow, offer a 5 per cent credit on the client’s next invoice, if they pay the current month’s invoice on time. Alternatively you could offer to make a donation to charity in return for every invoice paid on or before the due date.

Be receptive to complaints

Some clients will wait until the last minute to complain about work you’ve done. This may be a sign of a genuine problem, or it may be a delay tactic. Either way, deal with all feedback quickly so the client has no excuse to delay further.

Where possible, your contract, terms or order form should outline exactly what you’re expected to deliver so you can avoid miscommunication and complaints.

Contact multiple people in the finance department

We’ve all chased invoices to be told that the person who does payments is on holiday. This may be true, or it may be a callous tactic to delay your payment another week. Try to get multiple contacts in finance, and if the person with the purse strings is out of the office, find out who else can authorise payment in their absence.

Be confident in your right to be paid

If you work for a client, you should expect to be paid without shame or embarrassment. Don’t be afraid to chase, and chase quickly. Some clients will make you feel like an inconvenience, but you have the right to be able to pay your bills, too.

Once you’ve exhausted all of your options, we’d be happy to support you with our professional debt recovery services. We can also advise you on your right to charge late fees, interest and costs. Where possible, it’s best to be proactive with consistent late payers so that you avoid serious cash flow disasters.

Over 150 Years Of Industry Experience

Our modest but highly skilled team has a combined total of over 150 years of experience in commercial credit management and B2B debt collection. From independent IT contractors to major film and TV publishers, Safe Collections has the knowledge and experience you need to get paid quickly and cost effectively.

© Safe Collections is a trading name of Safe Collections Limited. Incorporated 1984. Company Number: 01815264. VAT Number: GB407358159. All Rights Reserved.

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