Late payment of invoices can cause huge problems for any business, and with the ongoing effects of the coronavirus pandemic being felt across many sectors, it is more important than ever to ensure that you’re getting paid on time.

Here, WHN Solicitors’s specialist debt recovery solicitor, Sara Beaumont, shares six helpful tips for dealing with late-paying clients while maintaining strong relations.

Outstanding debt crippling small businesses

Recent estimates indicate that there is currently £50billion in outstanding invoices owed to SMEs in the UK.

For many small businesses this means that they are unable to meet their own financial commitments on time. The result is an increase in insolvencies, with Q2 of 2021 having seen a 31 per cent rise in corporate insolvencies in England and Wales.

While there are often various options in terms of taking legal action against a non-paying or late paying customer, there are a number of steps which you should be taking first of all to avoid legal action and to retain a good relationship with your customer.

Know your debtor

To minimise risk, you should be collecting as much evidence as possible about your customer at the outset. This could include asking them to complete a credit application form and undertaking credit checks.

Set a credit limit

The information you have obtained about your customer through credit checking should assist you in setting an appropriate credit limit.

Don’t be pushed into agreeing a higher credit limit with your customer if the risk is too great and make sure that the level of credit is regularly reviewed to ensure that they do not exceed that credit limit without paying off existing invoices.

Send out timely invoices and reminders

Invoices and reminders should be presented formally and the information they contain should be accurate.

The most basic mistakes can be incorrectly addressing an invoice which means that it doesn’t reach the right person. Also ensure your invoice clearly states when payment is due and provide details for how payment can be made.

Telephone your debtor

Picking up the phone can often be the most effective way of getting paid. Before making that call make sure that you have all the required information available to you as the debtor may ask questions about the date of the invoice etc.

Always be professional and polite when making calls and never end the call without a promise of payment. If required, carry out a follow up call to ensure the debtor keeps to their word.

Be proactive

The longer that a debt is left to languish, the harder it will be to recover. There is little point in sending letter after letter to the debtor in the hope they will eventually pay.

Having sent out your invoice, a reminder and then having made an attempt to speak to the debtor, if payment has still not been received then you should seek legal advice as soon as possible.

Sara Beaumont is a director based at WHN’s Bury office. She leads a team of specialist commercial debt recovery lawyers, helping businesses on all debt recovery matters including internal credit control procedures, pre-issue debt recovery, court action and enforcement.
If you need help on a debt recovery matter, our specialist solicitors are here to help. Please contact Sara on 0161 761 4611 or by email