Are you dealing with a customer who is not pulling their weight with payments? Although late payments shouldn’t happen, they do occur more often than you’d think. As a new business owner, it may feel frightening and uncomfortable having to chase money owed to you, but thankfully, there are a few ways of handling the situation.
A contract and debt recovery specialist, Colin Ward of CW Contract Law and Legal, delivers invaluable advice on how to deal with late payments and prevent them in the future.
What are my rights and when do I need to intervene?
Payments are considered to be late 30 (or 60) days after either the customer receives the invoice; or 30 (or 60) days after the company has delivered the goods. The first thing to do if a payment is late is to send your customer another invoice. The idea is to prompt and remind the client to pay, and after 30/60 days have passed, you are legally allowed to charge interest on top of the original invoiced amount.
How can I prevent this in the future?
Here are a few steps you can take:
- Get your Terms and Conditions right. Maybe they need a review or you need afull T&Cs document?
- Consider altering your payment terms. What if you ask for your payments upfront?
- Clear Communication. Are you always direct and blunt to avoid miscommunication?
- Upload an accessible ‘Late Payment’ and ‘Dispute Resolution’ policy for your clients. Are they aware of the actions you will take if the payments are late?
What should my first steps be when collecting a late payment?
- A telephone call.
- An email (and always reference the T&Cs)
- A letter setting out that payment is required.
- A 2nd letter setting out the options, that includes recourse to debt recovery if payment is not made immediately.
Or you can instruct a legal professional…
Find our Debt Recovery service, ready to purchase, or get in touch via mi terms for a free analysis of the debt and the chances of recovery prior to instruction.
Rather than running after money, you can take time to run your business.
contributed by Colin Ward, CW Contract Law and Legal