How to chase up late invoice payments without being pushy

No one likes chasing up late invoices, but unfortunately, it can be part and parcel of running a business. But how do you do it without seeming too pushy? It’s a big concern for small businesses, as many feel ‘awkward’ or ‘rude’ following up on late payments. In recent research, 77% said they worry about damaging client relationships, and 76% think following up on outstanding invoices will hurt their chances of getting paid at all. 

But you deserve to be paid for your hard work. Keep reading to learn:

• Common reasons for late invoices
• What is credit control and why it matters
• How to chase late invoices step by step

62% of small companies say that they have experienced late payments. In an ideal world, all businesses would be paid on time. Potential late payments mean your cash flow management is crucial, to keep your business running smoothly even if you do have the odd unpaid invoice.

By understanding the reasons why you can protect the client relationships that you have worked to build and may help you minimise late payments in the future. 

1. Payment processes. If you are working with larger businesses, they may have a long, drawn-out payment process that involves multiple sign-offs, purchase orders and budgets, which unfortunately for you, may make it difficult for invoices to be paid on time. You can do your best to streamline things on your end, with technology like Countingup. The app allows you to create instant invoices so that there is no delay on your end.
2. Unclear payment terms. In the UK it’s a requirement that an invoice must be paid in 30 days unless you have agreed to your own payment terms with the customer. Keeping a short payment term such as 30 days will perhaps help you be paid faster, and even if it is late it may be quicker than if you had agreed to three months with the client. Always include the payment terms on your invoice to avoid disagreement on this. 
3. Lack of credit control. Creating a strong credit control process allows you to start conversations around late payments without hesitation, it can remind customers who genuinely have forgotten and it positions you as a company that takes its work seriously. Without a credit control process, your late invoice client might think they can string you along for as long as possible.

Credit control is the process of following up on late invoices that haven’t been paid after the mandatory 30 days, or payments that are later than the agreed payment terms. 

Always include the payment terms in your contracts and on your invoices so that you can then follow up once those payments become overdue. 

Don’t feel worried or embarrassed about discussing your credit control measures with the customer, it’s important to let them know what you expect from them in return for your services. We’ll walk you through the standard procedures for chasing late payments without seeming too pushy and make sure you are paid for your hard work.

If your invoice hasn’t been paid within the legal 30 days (or the time you agreed), then start by checking to make sure you included all the correct information and sent it to the right customer. Double-check your invoice date, payment amounts, customer details (name, trading name and address) and the details of how to pay your business.

When you are following up on unpaid invoices, keep a record of all communications you send and receive, as this proof will support your case if you need to resort to legal means. For example, send an email after you do a follow-up call, summarising what was said and ask for confirmation.

Here’s how to chase without seeming too pushy:

After your invoice hasn’t been paid after the mandatory 30 days (or the term you agreed) and is two days late, send a polite email to ask about the outstanding invoice and when you can expect to receive the payment. 

Send another email and kindly ask if there’s a reason they haven’t paid, such as a problem with the work delivered, a question about the amount, etc and how you can help. 

Call your contact to make sure they’ve received your emails and ask if there’s a problem with the invoice and when you can expect payment. Remember to send an email summary after the call to create a record of what was discussed.

Make another phone call to remind your client of the outstanding debt. Again, ask if there is a reason why the payment is late, if there’s something you can do to speed up the process, and when you can expect to receive it. Send an email after the call to add to your record.

Send a friendly collection letter to your client to explain that since the invoice is late, it will now start to accrue interest. You can charge a ‘statutory interest’ of 8% plus the Bank of England base rate for B2B transactions (unless otherwise agreed in your contract). Then send a new invoice with the updated payment amount.

Send a final notice letter or another formal collection letter from your company, your accountant or your business lawyer if you have one, which includes the original invoice date, outstanding amount, services provided, contact person and payment terms. Inform your customer that you’ll take legal action or progress to a debt collection agency if payment isn’t received within a week. 

If your invoice hasn’t been paid by now, you’ll probably need to enlist outside help like invoice factoring, debt collection agencies, or legal action such as small claims court. Ideally, the previous chasing emails will ensure you get paid before it comes to this.

Countingup is the business current account and accounting software in one app. It automates time consuming bookkeeping admin for thousands of self-employed people across the UK. 

With the Countingup app, you can create invoices in seconds, get notifications when you’re paid, and receive automatic invoice matching so that you don’t have to worry about bookkeeping admin.  

Find out more here to save yourself unnecessary hours on accounting and financial admin stress so that you can focus on running your business.