You have delivered your work; they have your payment terms and you have sent your invoice. The payment due date has been and gone, with no payment, no responses or updates as to why, so you are now starting to panic...
I thought I would share some tips on how to avoid non-payment and what to do next if payment is late without destroying the client relationship.
The best way to avoid non-payment is to ensure payment terms were agreed upon and signed by both parties before any services or work was undertaken.
You can also deter against late payments by including a late payment interest charge in your agreement. This is, at present, by law, 8% plus the Bank of England base rate for business to business transactions:
Example:
If your business was owed £1,000 and the Bank of England base rate was at 0.5%
The annual statutory interest on this would be £85 (1,000 x 0.085 = £85)
Divide £85 by 365 to the daily interest: 23p per day (85/365 = 0.23)
After 50 days this would be £11.50 (50 x 0.23 = 11.50)
The law does state that if you have not agreed to payment terms or your invoice does not state the payment due date, then the payment is late 30 days after either:
The client receives the invoice
You deliver the goods or provide that services (if this is later)
If after setting out and agreeing on payment terms the payment is still late, the first important step is to send a friendly reminder. Sometimes, your client could have just forgotten, or they just have not seen your invoices. Remember to keep it friendly and add the invoice as an attachment for easy access. The first reminder needs to be friendly so if your payment terms say 15 days, wait a few days longer. I normally wait 3 to 6 days.
I have included three email templates for you to use.
If the first email goes unanswered then wait 7 days to send another. If you still receive no reply, send your final email 7 days later. Your final email should have the invoice attached showing the overdue payment interest charge.
The threat of court proceedings usually does the trick and you will usually receive payment but if you do not then you will need to open a small claims case against them via
You can only make a claim if you have proof that, they owe you the money and you have given the claimant reasonable time to settle the outstanding debt, this is why keeping copies of the three emails you have sent them requesting payment are important, they will come in handy when making a claim.
Good luck
Heidi
Creative Edge VA Ltd
If you find yourself struggling to find the time to do your invoicing or are spending your evenings and weekends completing your admin tasks. then please get in touch: hello@creativeedgevaltd.co.uk
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