How to deal with late customer payments

March 11, 2019Olivia Cheetham

Chasing payments for invoices or services can be hugely frustrating. The majority of businesses will, at some point, have experienced trouble receiving payments they are owed and the impact it can have on a business can be significant if it continues on a regular basis. With the practice being so common, how can you address the issue and avoid it happening in the future?

There will always be a reason behind late and non-payment so it is important to establish this before taking any steps. Is the client struggling with cash flow? Were they happy with the service? Or are they simply being stubborn and refusing to pay? Knowing the reason behind non-payment will help you identify the best way to tackle it.

If the client is struggling with cash flow, they will probably not be forthcoming with this information, as many may see it as a negative, rather than just a normal, part of a business. Approach this issue delicately. Remember, receiving your money in a month’s time is better than not receiving it at all. Speak to the client and offer to put a payment plan in place that suits them. The client will appreciate your understanding and you will not have lost the relationship and customer. Using payment plans are not ideal, as they still leave the business with a delay in receiving funds, but at least you have the peace of mind to know the funds are coming.

If the client is not paying because they were unhappy with the service, you need to establish exactly what they were unhappy with. Maybe the issue is minor and can be easily sorted, if this is the case, then communicate with the client and offer to amend anything they are unhappy with. If it’s a bigger issue, what sort of notice period do you have? Most companies have a cooling off period after purchasing a service or product in which they can return for a full refund. If someone has asked for a refund within this period, then it must be returned. However, after this period you are well within your rights to not provide a refund and/or demand payment from the client.

If the client is simply being stubborn and refusing to pay, then an option that is used quite regularly is to go to the Small Claims Court. You can apply to a County Court to claim money you’re owed by a person or business. Another option is to use a mediation service, which can be quicker and cheaper. Mediation is when an impartial person helps both sides work out an agreement. You will have to pay a court fee for using the Small Claims Court which varies depending on the amount of the claim. The majority of claims can be done online. If you win your claim, the court will order the defendant to pay and can use other means such as bailiffs if still do not pay after the order.

Talking to your customers is the key to reducing late payments and hopefully stopping them completely.  It is easy to become irritated with customers for late and non-payment, but keep calm and professional to see the best results.

Here at Easypay, we have our own internal Credit Control team that works on behalf of our clients, to chase invoices and ensure timely payment. We have a great record of tackling non-payment and our team has heard every excuse in the book! We are the experts in supporting recruitment agencies through 100% funding and back office services.

With Easypay, it’s personal…