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One of the most uncomfortable parts of being self-employed is dealing with customers and clients that fail to pay you on time. On one hand, you need to make sure you get paid promptly for your work, but on the other, you want to keep things civil and not antagonise a client who may want to use your services again in the future.
Handling late payments is a delicate business, but at Crunch, we’ve been helping people navigate this minefield for over 10 years. We’ve also seen our fair share of ludicrous late payment excuses.
In our previous Checkatrade article ‘How to manage your cashflow’, we outlined contract terms and conditions that can help prevent an invoice going unpaid, but if push comes to shove, how do you go about dealing with a client who isn’t playing ball?
How to chase an unpaid invoice
If your client fails to meet your agreed payment deadline, your first port of call should always be a polite and casual payment reminder email. Consider drafting an email template and sending a reminder as standard to every client on their payment deadline day. Keep it light, though – your client may have genuinely made an honest mistake. You can find some free Late Payment Reminder letter templates on the Crunch website.
If your initial chaser email bears no fruit, the next stage is a call to your client or their accounts department. Just remember to keep it gentle and polite, as you did with your first email.
If these initial reminders don’t work, it’s time to make things a little more formal. Write an email, or a letter if you prefer, explaining that if your invoice isn’t paid within a certain number of days, you’ll charge them statutory interest (which at the time of writing sits at 8%) and the Bank of England base-rate for business-to-business transactions (which, again, at the time of writing, is set at 0.75%).
Debt collection and legal support
By now, you should have received your overdue payment, but there are still available options if things still haven’t been resolved. You could decide to use a debt collection agency, such as Crunch Collections. They don’t have any special powers to force your clients into paying, but they will do all the unpleasant chasing, emailing, and calling on your behalf. Usually, they just charge a percentage cut of the value of your unpaid invoice when they’re successful.
All good debt collection companies will always act to preserve the working relationship between you and your client and handle the situation amicably.
You have a few legal options at your disposal as well if things get really problematic. Employing the service of a solicitors firm that specialises in debt recovery may prove a little costly, but they’re available should you need them.
You could also consider going through Money Claim Online. All you need to do to is register for a UK Government Gateway account and complete a claims court form, which usually takes about half an hour. Your client will then receive a letter from the court ordering them to pay you. If they fail to, the court will register a County Court Judgement (CCJ) against them, which stays applied to their company for six years, and essentially acts like a black mark against their credit score. This doesn’t guarantee you’ll finally receive your payment, and it will almost certainly ruin your relationship with them, but it’s an option all the same.
Have you had any experiences with customers paying late, if so, what happened?
Last edited by Lauren; 02-08-21 at 11:12.