Help and advice
Credit control and chasing payments
How can you ensure you get paid, on time, every time? There’s no magic cure to bad payers, but you can take steps to protect yourself.
Before we discuss how to deal with late payers, let's consider what you can do to improve your chances of getting paid for every word you write.
Credit control - best practice
Rock-solid credit control is about more than just sending invoices. You can take steps before, during and after projects to have the best chances of receiving payment.
Contracts or proposals - these are a great way to start projects. Not only does a contract show your client that you're professional, it ensures that the terms of your agreement are clearly defined in writing. Get your client to accept and sign your agreement before you write a single word. Again, this might seem like an inconvenience, but it is a standard process for most businesses.
We recommend adding a termination clause into your contract that stipulates what happens if either party wants to cancel the agreement. For example, you might state that the client has to pay for your time up to that point, should they want to cancel.
Deposits - make a lot of sense. If your client is intending to pay you, then why would they object to paying a deposit? Getting a non-refundable deposit from your client gives you an incentive to set time aside for their project (and turn down other work). Paying a deposit gives your client an incentive to provide any resources or support that you need to complete the project. And of course, having a deposit helps to balance out your cash flow.
Payment terms - you decide when you get paid. Although larger companies will have their own payment terms, which can easily stretch past 60 days. Smaller companies are often willing to accept shorter payments, such as 7 or 14 days. Whatever you choose, make it clear in your contract or proposal.
Dealing with late payments and non-payers
If your invoice is overdue, try sending a polite email to remind your client. If you don't get a response, or you get a series of excuses, you may need to escalate the issue.
Using a debt chasing service may be enough to scare the client into paying you.
The Thomas Higgins firm of solicitors offers a debt recovery letter service. From £2.00 + VAT they will send a letter (letter before action) on your behalf, instructing the client that you intend to pursue court action. You can also choose to send a late payment demand, in which you request interest, compensation and debt collection costs.
The Money Claim Online service is operated by HM Courts & Tribunals Service. You need to register for the Government Gateway first. You can then use the Money Claim service to demand the money owed to you. The Money Claim Online charges on a sliding scale. You pay £25 for a debt up to £300, while debts up to £3,000 cost £105.