We need to talk about late payments

Wow. I was on LinkedIn earlier and one of my connections posted that he’s just been paid for a job 671 days late! That’s got to be some sort of record?!

I’ve never had an experience like that thankfully but I’ve had my fair share of late payers over the years. If you work for yourself, it’s probably something you’ve come across at some point.

Being paid late is so frustrating

There’s the obvious cash flow issue and the knock-on effects it has on paying your bills and suppliers. And, if you don’t have money in the bank or some other source of funds, it can create major stresses if you’re expecting money to hit your account on a certain day.

On top of that, being paid late feels personal

We know our clients, we pour our hearts and souls into our work, we pull out all the stops and work to tight deadlines. Not being paid on time can feel like someone doesn’t respect you or value your work.

I’ve been paid late several times in the seven years I’ve worked for myself, never by more than a few weeks so I’m probably lucky, but I still find myself chasing invoices two or three times a year.

Here are a few tips to help you manage late payers and try to avoid the problem in the first place:

Try to take the emotion out of it

Easier said than done this one. It feels personal. It feels disrespectful, you feel unvalued, you wonder why you worked your ass off to hit their deadlines when you’re still waiting to be paid weeks or months later. You find yourself wanting to fire off ranty emails, but do your best to keep it in check.

I get it. It’s a total pain. You’ve done the work, you’re owed the money, it can have repercussions on what bills you can pay yourself and whether you eat beans on toast all week.

But 9 times out of 10 the late payment will be caused by an admin error at the other end, it’s not part of a greater plan to make you feel rubbish.

You may be angry but your client won’t appreciate you sending them rude emails.

Chances are they’ve never had the lumpy income of self-employment, never had to ask where their money has got to, and probably have nothing to do with the payment process for yours either.

So unless they’ve really screwed you over or the relationship has totally broken down and throwing your weight around seems like the only option, always be polite and professional.

But don’t let it slide

Without being too passive-aggressive or just plain aggressive-aggressive, it’s OK to show you take yourself seriously.

Send your client a polite email within a day or two of the payment being late, it can be a ‘gentle reminder’ or an ‘I hope everything’s OK your end?’ message and give them a few days to respond.

If their radio silence winds you up, go back to point 1 (above). Again, it’s unlikely they’re deliberately ignoring you, they may be on holiday, knee-deep in work or a family crisis.

If you get no response to your email, try again, re-stating the facts of what you did, for who in the organisation, when the invoice was sent and when it was due.

If your second email’s ignored it’s time to pick up the phone and try to speak to someone about it. And be sure to keep a note of all your communications.

Keep a close eye on payments

Know who owes you what when. I’m a big fan of keeping life simple so I have a spreadsheet for my invoices and cash flow (with incomings and outgoings). I also mark when each payment is due on my iCal so I can see what’s coming in at a glance.

Do whatever works for you and set reminders to check your business account. If you’re too busy or have lots of payments to keep track of, outsource it to someone whose job it is to stay on top of things.

Don’t apologise!

If you’re anything like me, as soon as you assert yourself you want to apologise but try to avoid language like ‘I’m just’ or ‘I’m afraid’. You’re asking for money you’re owed for work you did in good faith.

Tracking down your payment is probably as tiresome for the client as it is for you, but you don’t need to be sorry about it.

Deal with your terms up front

Agree the fee, project requirements and payment terms so everyone knows where they are before you start work and if it’s a big piece of work or will take months, ask for a percentage at the beginning or in stages.

It’s standard for copywriters to ask for 50% when a contract is signed or a project’s agreed and 50% on submission of the first draft.

Whatever your payment terms are, businesses in the UK are covered by The Late Payments Act 2013. Under the Act, you can charge clients a late fee of:

  • £40 for a debt up to £999
  • £70 for debts of £1000 to £9999
  • £100 for amounts over £10,000

You can also add interest at 8% plus the Bank of England’s base rate from when the payment is considered to be late. That’s either 30 days after you’ve submitted the invoice or 30 days after you’ve supplied the goods or services (if this is later).

It’s the law of the land so there’s no need to include how you deal with late payments on your invoices, though you can do if you want it to act as a deterrent for slack payers.

The fees don’t come close to covering the stress of late payments or the time it takes to chase them but they are a back-up and show you mean business.

Offer early payment discounts

Some people offer lower prices for early payment. I’ve not tried this – let me know if you have in the comments.

For example, if you’re invoicing £1000 you could encourage someone to pay promptly by giving them a 5% discount if they pay within 7 days.

Remember — life happens

People leave jobs, they’re ill, have accidents, go through divorces, emails get lost, processes don’t work… shit happens. And sometimes that means you’ve been waiting eagerly for weeks for that moolah to drop into your account but no one else even remembers you sending your invoice.

By the time it’s late you’re already annoyed and possibly put out by the impact on your cash flow, but the person at the other end has only just heard what’s going on.

It’s worth remembering that you’ll still want to be on good terms with your client in three weeks when you’ve been paid and all is well in the world, so try and cut them some slack if there’s a good explanation.

Just knowing what’s gone on can really help (even if it doesn’t get you paid any faster).

Get some professional advice

As a member of the Chamber of Commerce, among other things, I get free legal advice. It’s a brilliant service and more than justifies the membership fee alone.

You phone up, leave a message about what area of law you need help with and an adviser calls you back within an hour or two. It’s a lot easier than having to find a solicitor with a hefty hourly fee when you’re already feeling stressed (and the advisers can help with much more than just late payments).

Taking further action

Companies go bust, people leave and no one else in the organisation knows you even exist let alone anything about the work you’ve done and the money they owe you. And there are a few shysters out there who will try and get away without paying.

If things go seriously wrong, you’ll need to take further action and probably speak to a solicitor to discuss your options. That might be to take someone to the small claims court, make an official demand for money you’re owed, register your claim to money from someone who’s gone bankrupt or a company that’s gone into liquidation, or try mediation.

Let’s hope it never comes to that but just in case, here are a few handy links:

If you have any tips or stories to share, feel free to leave a comment. I’d be interested to know how other people handle late payments, especially if you’ve ever charged late fees.

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