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It is best practice to stop late payment happening in the first place by ensuring that you have a robust credit control process in place. Things such as checking the credit worthiness of your customer and getting your invoice right are essential elements of good cash flow management.

However, once you start chasing unpaid bills there is a certain level of discretion needed to get the best result. Although you want payment, the customer might be a valued one that you do not want to alienate in the future. With this in mind, it is an understandably fine line between making fair, acceptable requests for payment and indulging in what the customer might perceive as harassment.

You value the customer because you have previously dealt with them (perhaps on a regular, consistent basis) and found them reasonable, prompt payers. For all you know, this payment delay is a blip that will never happen again, so you do not want to alienate them and risk losing any repeat business they might offer. If you are a small business, your relationship with the customer is closer than usual and you may rely on regular business from them.

You need to let them know that it does matter when they fail to pay you; otherwise this sets a precedent in your professional relationship that is difficult to overcome. You should put an emphasis on fair debt collection, though, not jumping straight in and accusing them of deliberately delaying paying.

Be understanding

Initially, you should give the customer the opportunity to explain why payment hasn’t been made yet. Give them a phone call or send them a letter as a reminder, or as a courtesy to see what they thought of your service and whether they have any comments, feedback or queries. A neutral tone will work best – for all you know, they have simply forgotten or misplaced your invoice, and once they realise they will pay in full immediately.

In certain cases, you may feel it is right to offer the customer extended credit (assuming they are credit-worthy), or allow them to pay in instalments if they are having cash flow problems. There is nothing wrong with doing this as long as you make clear that it is a one-off that in future are not acceptable.

Does the non-payment stem from your poor service?

There is a chance that the customer may not have paid because of an issue they have with your service. If this is the case, work with them to resolve it: If the issue was your fault, you might offer a reduction (credit) to keep up good terms, or accept a scheduled delay in payment. Depending on the case, flexibility is a good trait to display. If, however, the issue has nothing to do with your service, you may have to take a harder line with non-payers.

Keep records of all communication

In cases like these, where disputes can quickly turn into “he said, she said” dialogues, it is vital you prove what the agreements and payment timelines were by producing paperwork that specifies every relevant term, condition and deadline. This shows that you are within your rights to ask for payment, and that you can take further action using late payment legislation if payment is still not forthcoming. If you can prove that the customer was aware of this information, perhaps by including it within an invoice, then it strengthens your case and weakens that of your buyer.

As long as your communications remain fair but firm, and you continually emphasise the good relationship you and the other party have enjoyed in the past, it should only be the unreasonable actions of the customer that result in you having to take the case to court.