How to: chase a late payment
Knowing how to chase down a late payment from a firm you’ve worked for or supplied can be tricky – especially as you might want to work for them again and you probably don’t want to get into anything legal at this stage. But there are steps you can take…
The first thing to work out is when your payment becomes overdue. Standard payment terms in the UK are 30 days from the date your invoice was issued. However, many businesses set their own payment terms – so check in case you agreed a longer one when taking on the work. If not, you can begin to chase a late payment:
1. Don’t be afraid to chase a late payment
It can feel a bit awkward chasing money. But remember it’s your money and you have every right to check on its status. So don’t be shy about firing off a polite email to the person you sent the invoice to – just checking on the status of it and when it might be settled. The chances are they get similar emails all the time and will be happy to update you.
2. Follow up with a ‘late invoice’ reminder
If your initial note doesn’t prompt the response you wanted after a week or so, follow up with a slightly more formal ‘late invoice’ reminder. It’s important to stay polite – but resending the original invoice with a note to say ‘I’m just letting you know that the attached invoice is now overdue, and I would appreciate it if you would settle it as soon as possible’ will likely get most firms to act.
3. Warn them you’ll add costs
If you still don’t receive a suitable response, it’s time to get more formal. Send an email setting out that – as you haven’t received responses to your previous queries – you’ll need to receive full payment within the next seven days, or you’ll begin adding charges to your invoice in line with Government legislation. It says you can charge interest and debt recovery fees on late commercial payments – at up to 8% interest plus the Bank of England base rate on late payments. The threat of passing on charges should – hopefully – get a response.
4. Hit the phones to chase a late payment
If your warning about additional charges still hasn’t done the trick, pick up the phone and call either your contact at the firm or the finance team directly. Stay calm and polite – and you’ll be surprised what a difference speaking to someone can make. Let them know that you’ve sent a few reminders and haven’t received a response – and that you’re concerned about when you might receive the payment. It also won’t hurt to let them know how important it is that you get paid on time – to meet your own bills and outgoings.
5. ‘Get legal’ on them
If all those moves still don’t get a resolution, it might be time to start taking some legal action. There are a few routes you can take. One is a Statutory Demand, which is a formal legal demand that they resolve the issue within 18 days and pay you within 21. If they don’t, they can be wound up – so this usually does the trick. Another route is a County Court Judgement. This is what we used to call the Small Claims Court and is where the court will make a call on what’s owed and force the payment.
6. Use an expert debt collector
If your money is still not forthcoming, you could also use a debt collection firm to help you. You’ll probably have to give up a slice of the money, as they’ll take a commission – but many of these firms are way more reputable than the TV shows make out, and it could be a good way to finally get paid.
Get more help: You can get further help and guidance from a number of professional and government bodies. Find details on those on our Get Help page.