Advice from a Professional on Getting Clients to Pay on Time

There is no cast iron guarantee that every client will pay at all, let alone on time. Sometimes non-payers just want to see if they can get away with it, other times they will have been overrun by circumstances and the issue can be resolved.

Organisation, communication, and clear terms of service make sure everyone is working from the same balance sheet, and give you the best chance of getting paid on time.

Here are some tips on setting up your systems, and some advice about what to do when things go wrong.

Know Who Owes What

You can’t get paid if you don’t know what people owe you. From the outset, set up a system whereby you keep track of what work is done for whom, or which companies have bought which products and how many, at what cost.

Keep your tracking system up to date at all times, checking it at least daily to add new items. When you come to compile invoices at the end of the month, the task will go much more smoothly when you know who owes you money.

Set Your Terms and Include What Clients Need

Freelancers dealing with other freelancers can find getting paid easier than those dealing with larger companies that have separate accounting departments. Some points to consider when you’re setting up terms, invoice format, and payment options are:

  • Ask customers or clients what they need to have included on your invoice. For many, a simple invoice number is enough, but others might need a purchase order number or a detailed breakdown of charges and services. Computerised and automated accounting departments may not be able to process your invoice simply because they don’t have the information they need to fill in all their fields.
  • Make it clear how soon you expect payment. This is quite simple — you just add ‘payment due in 30 days’ or ‘payment due by return’. Whatever you expect, make sure your customers are clear on your terms. Again, when dealing with larger companies that work to payment cycles, they may not be willing to change their system to accommodate yours. Find a compromise so both your systems can work together.
  • Consider adding late payment penalties in the form of interest, and maybe also offer a small discount for early payment.
  • Make it easy for customers to pay you. Some might still want to post cheques, while others will want to pay by electronic means. Make sure you can accept bank transfers, and set up Paypal or some other means of personal electronic payment so you can offer a range of payment options.

Remember common etiquette and politeness. It costs nothing to add a personal note and say please and thank you. In fact, it’s been found that doing so can increase the chances of you getting paid on time by as much as 5 percent.

Chase Proactively

Stay on top of due and overdue invoices by monitoring bank accounts and accounting software. Online accounting packages make this easier than if you’re entering all your transactions by hand, but they can also introduce some complacency when you know everything is happily updating in the background.

Check often, and chase as soon as payments fall behind. Be polite about it as non-payment may have been a simple oversight or due to other unforeseen circumstances. That said, you still need to be paid for services or products, so don’t fear getting in touch to request payment and remind clients of agreed terms.

When all else Fails

Every so often, clients just won’t pay. In these situations you have one or two options.

Before you write off the invoice and accept the loss, send a ‘Letter Before Action’ through a solicitor. This is a formal letter that warns of impending court action if payment is not received within seven days and will normally provoke a response.

A second option is to issue a late payment demand. By law, you are entitled to charge annual interest at 8% above base rate for each day your invoice remains due, providing both parties were acting under business terms.

You can also charge compensation should the invoice be even a day late in payment. The level of compensation you can charge depends on the amount owed, but up to £999.99 it is £40.

If you don’t have your own solicitor, there are online solicitors who will send out letters before action or late payment demands for a small fee. They will also follow up with court proceedings if you so instruct them.

Knowing how to organise your record keeping systems, then maintaining and sticking to those systems, will go far to minimise the instances where you don’t get paid on time.

Drew writes for Braant Accounting – see their website for more bookkeeping tips.

About Nathan Goodman

Nathan Goodman is the bestselling author of The Jana Baker Spy-Thriller Series. "A terrorist on the loose, a country in panic, and time is running out..." For a free copy of Protocol One, visit the author's website.