Dealing with late payments when you’re self-employed

Dealing with late payments when you’re self-employed

When you run your own business, every penny counts. If one client fails to pay you on time, it can have a catastrophic impact on the rest of your company, making it harder for you to pay the bills, buy supplies, and service your next client. Although the UK government is planning to make changes to legislation to reduce late payments, they’re still inevitable in some cases. Below, we’ve put together advice on dealing with them when you’re self-employed…

Take payments upfront

Perhaps the easiest way to combat late payments when you’re running your own business is to charge your clients upfront for your work. That way, you don’t have to worry about them doing a runner once you’ve finished the job, and you can use their funds to help pay towards supplies for the job at hand. If clients aren’t happy handing over hundreds or even thousands of pounds before you start working for them, consider charging 50% or even 25% upfront.

Charge interest from day one

One of the best ways to incentivize your clients to pay their invoices on time is to charge them interest from day one of an overdue invoice. When you send out your invoice, be clear that you expect it to be paid on the same day, within 7 days, or within 28 working days, and let them know that you’ll be charging them interest after that. They’ll soon want to pay the invoice as soon as possible to ensure they’re not charged any interest on their payments.

Use a payment platform

If you’re looking for an approach that totally takes the pressure out of payments, then you could consider a platform such as PongoPay, which serves as a “middle man” and allows you to take payments from a client up-front for the job but have the money held in a secure escrow account until you finish on the job. It offers both sides peace of mind, can help you to build trust and credibility and ensures that you’ll never have to chase a late payment again!

Name and shame them

If all else fails, we recommend naming and shaming those clients who simply won’t pay, especially if they’re larger organisations and businesses. There’s a fine line here – you’ll have to be careful that you don’t damage your reputation in the process, but if you’re sensible and strategic, it can serve as a public relations exercise for your business and help you to win over new clients, and indeed ensure that overdue invoices are quickly settled.

Do you have any other tips? Let us know and check back soon for more, from us.

Categories: Business

About Author