• keepingyourbooksltd

How to chase an overdue invoice (the right way)

Updated: Oct 5


You have delivered your work; they have your payment terms and you have sent your invoice. Payment due date has been and gone, with no payment, no responses or updates as to why, so you are now starting to panic..

I thought I would share some tips on how to avoid non-payment and what to do next if payment is late without destroying client relationships.

  • The best way to avoid non-payment is to ensure payment terms were agreed and signed by both parties prior to any services or work being undertaken.

  • You can also deter against late payments by including a late payment interest charge in your agreement. This is, at present, by law, 8% plus the Bank of England base rate for business to business transactions:

Example:

  • If your business was owed £1,000 and the Bank of England base rate was at 0.5%

  • The annual statutory interest on this would be £85 (1,000 x 0.085 = £85)

  • Divide £85 by 365 to the daily interest: 23p per day (85/365 = 0.23)

  • After 50 days this would be £11.50 (50 x 0.23 = 11.50)

The law does state that if you have not agreed payment terms or your invoice does not state the payment due date, then the payment is late in 30 days after either:

  • The client receives the invoice

  • You deliver the goods or provide that services (if this is later)

If after setting out and agreeing payment terms the payment is still late, the first important step is to send a friendly reminder. Sometimes, your client could have just forgotten, or they just have not seen your invoices. Remember to keep it friendly and add the invoice as an attachment for easy access. It is important for the first reminder to be friendly so if your payment terms say 15 days, wait a few days longer. I normally wait 4 or 6 days.



I have included three email templates for you to use.

First Email Template
.pdf
Download PDF • 119KB


Second Email Template
.pdf
Download PDF • 122KB


Third-Final Email Template
.pdf
Download PDF • 94KB






If the first email goes unanswered then wait 7 days send another. If you still receive no reply, send your final email 7 days later. Your final email should have the invoice attached showing the overdue payment interest charge.


The threat of court proceedings usually does the trick and you will usually receive payment but if you do not then you will need to open a small claims case against them via


https://www.gov.uk/make-court-claim-for-money


You can only make a claim if you have proof that, they owe you the money and you have given the claimant reasonable time to settle the outstanding debt.

Good luck



Heidi - Keeping your Books Ltd


If you find yourself struggling to find the time to do your invoicing or are spending your evenings and weekends completing your admin tasks. then please get in touch: hello@keepingyourbooksltd.co.uk


www.keepingyourbooksltd.co.uk


Check out how I can help you in just an hour - 50 Tasks I can do in an hour









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