Here's a simple schedule of what actions to take from sending the invoice, all the way through it being paid late.
What do upon sending an invoice
- Make sure all essential detail is included on the invoice, including your payment terms, bank account details, and contact details.
- Ask for confirmation of receipt, don't assume it has been received - especially if this is a new client, or you've had problems with the client in the past.
- Follow-up within 24 hours to check it has been received and there are no questions or issues with the information provided.
- 5-10 days before the due date, contact your client to remind them of the upcoming due date, and confirm the invoice has been processed.
What to do upon late payment
- 1 or 2 days after the invoice is due, contact them via email to explain you haven't received payment, enquire what is holding up payment, and ask for them to provide you with a confirmation of when the payment will be made.
- If they are non-responsive, send reminders regularly (perhaps weekly), and try and contact them on the phone to understand the cause of the hold-up. Remind them of your payment terms and you're entitled to interest charged from the date of payment due.
- If you've heard from the client and they have an excuse on why the payment will be late, make a decision on whether this is acceptable to you, and agree and confirm a payment date in writing. You are entitled to statutory compensation, even if you agree to a later payment.
After 30 days of non-payment
- Try to speak to someone more senior in the business, and make sure you reissue your invoice with an updated cost including interest and compensation payments.
- Keep a track of all communication, as you might need to refer to it, or use it should need to take the case further.
- Make a decision on how you want to escalate - Identify your options from raising a Statutory Demand to contacting a debt collection agency. Sometimes all you need is a more formal letter to nudge them into action.
- Speak to the Small Business Commissioner and seek support - they will be able to guide you through the best course of action, and help you understand what steps to take, via their website.
