Business111.com

Register at http://www.business111.com for more factsheets By Liz Barclay

A Factsheet from

You’ve done the job. Delivered what was agreed. Sent the invoice. And now you’re chasing. Again.

The client who was all smiles when they signed the contract is now ghosting your emails, dodging your calls, or spinning excuses—“accounts is off sick,” “the system’s down,” “we’re just waiting on sign-off.”

Sound familiar? You’re not alone. Late and non-payment, and long payment terms in contracts are huge biggest threats to small businesses and costing the economy £11bn a year. You don’t have a finance department or legal muscle on speed dial. What you do have is bills to pay, and stress.

Don’t wait. The longer you leave it, the harder it gets. Be clear, polite, and persistent:
• Confirm the due date
• Reference the contract or agreed terms
• Ask for a payment update and set a deadline

If that doesn’t work, talk to the casework team at the Office of the Small Business Commissioner. They may be able to intervene on your behalf for free, if you agree to that. If not they can give you information about escalating in stages with: a formal letter, an invoice for interest and compensation (legally allowed under the Late Payment of Commercial Debts Act), a statutory demand. You may ultimately decide to try mediation. However taking legal action should be the very last resort. Even a fast tracked small claim can take around 50 weeks on average and you could be throwing good money after bad.

Prevention is better than cure. Put watertight terms in writing from the start. It’s not just ‘late’ payments that leave you struggling but long payment terms. Check out your customer’s payments record before you agree to do the work. Credit Reference Agencies have information. Firms that have Gold, Silver or Bronze awards on the Fair Payment Code have proved they pay when they say they pay. 

Don’t just accept the 90 or 120 days payments on offer. Negotiate a better deal or walk away. Ask for payments up front to cover costs before you start work. Ask for instalments or staged payments as you complete parts of the job. Include payment deadlines, penalties, and clear stages for invoicing. Take deposits for larger projects. Set your own terms and stick to them.

Above all trust your instincts. If a client has a reputation for dragging their feet or seems disorganised from the start, build that into your terms or look for better customers.

It’s not personal. It’s business. In business, cashflow makes or breaks. You deserve to be paid, know your worth, set your terms, stick to your guns and gain respect. Refuse to be placated.

Don’t accept poor payment practices as normal. They shouldn’t be. The Government has just committed to making sure they won’t happen in future. Stand up and be counted.