What to Do if a Client Does Not Pay on Time – Expert Advice

19th June 2024

Knowing what to do if a client does not pay on time is important information for any business owner or self employed individual.

If you provide services to a client and they have fail to pay an invoice on time, taking action quickly is crucial to getting paid.

There are many reasons why an invoice may turn into a late payment. Reaching out to the client as soon as the invoice is late can help to understand why.

It is good practice to implement a credit control system that has automatic reminders in place for when this happens.

The admin side of chasing invoices and payments can be time-consuming, especially when the priority should be acquiring new business.

DCBL are the UK’s leading industry experts when it comes to recovering invoices that have become past due.

Every year, we recover tens of millions of pounds worth of unpaid debts for SMEs and blue chips companies.

We have produced this article to share advice for what to do if a client does not pay on time.

Knowing What to Do if a Client Does Not Pay on Time

When a client or customer doesn’t pay an invoice on time, this can cause all sorts of problems internally.

Firstly, you will have to spend time chasing the invoice which should be used on bringing in more business.

Secondly, not being paid on time will affect your cash flow. This is especially true if you have had to buy materials prior to completing the work for the client.

Knowing what to do if a client does not pay on time can help to reduce the effects to you.

Follow the below advice to help prevent situations where a client doesn’t pay your invoice on time.

Update Credit Control Processes for Invoices

When clients or customers won’t pay their bill on time, this can be extremely frustrating for business owners.

Whilst you can’t do anything to change what has happened now, there are steps to help prevent this in future.

Robust credit control processes are beneficial to any business that works with lots of clients and sends out regular invoices.

Clearly outlining payment terms at the start of any business transaction will help to prevent any issues related to payment.

You could consider including a clause that puts a late fee on any client that fails to pay on time.

Send a written copy of your payment terms and conditions to the client and get them to sign it. This will create proof they have read and acknowledged the terms.

You can fall back on these in future if they fail to pay their invoices on time again.

For future reference, one option to consider would be to send the client a statutory demand. This document will essentially state that if the invoice isn’t paid on time, then court proceedings may be started.

This would be a positive preventative measure to ensure invoices are paid on time, negating the need for legal action.

Communicate With Your Client When They Won’t Pay on Time

Getting in contact with your client when the amount owed is overdue is a good first step to getting paid.

Make sure to document all written/digital communication with the client in case you need to escalate this in future.

It is important to understand why they have failed to pay as this could be a simple solution to fix.

The client may need more time due to financial risks affecting their own business which has impacted your payment.

A way to resolve this would be to offer payment plans to clients in this position. Working with them to resolve their issues will benefit the relationship between you and your client.

Sadly, clients may simply refuse to pay the invoice that is due, and when this happens further escalation is needed.

Legal Proceedings vs Using A Debt Collection Agency

When escalation is needed for non-payment of an invoice, it can be challenging to know HOW to escalate the situation.

There are many methods available for getting unpaid invoices paid and it is worth knowing which one to choose.

Two popular options for getting customers to pay what they owe are legal action or using a debt collection agency.

Debt Recovery Solicitors are seen as a quick way to resolve unpaid invoices due to their renown and experience.

Whilst this may be the case in some situations, taking legal action against your client can end up being rather expensive.

They may offer to send a letter before action, but if this fails, you will have no option but to issue proceedings and pay a large court fee to the solicitor.

Using a debt collection agency that specialises in the recovery of invoices when a client or customer won’t pay is far more beneficial to your business and your cash flow.

Debt recovery agencies can, in some cases, offer a no-win, no-fee service meaning you only pay upon the successful recovery of your debt.

When an agency contacts your client to pay the invoice outstanding, the risk of further escalation is usually enough to get them to pay.

Whilst the route of court processes can be equate to expensive legal fees on it’s own, DCBL combine the two to create a “One Solution” service.

“One Solution, Debt Recovery Made Simple”

DCBL’s “One Solution” service takes the benefits of using a law firm and debt collection agency and combines the two.

This results in a seamless and effective model that allows clients to instruct us at any stage of the resolution process.

We achieve this by working in conjunction with our sister-company, DCB Legal, who are an SRA-regulated law firm.

Whilst DCBL’s pre-court debt recovery is second to none and has the highest percentage of success, some cases do require legal escalation due to complexities or unknown issues that may arise – this is where DCB Legal can support clients.

Getting Customers to Pay – Instruct DCBL

If communicating with your client has failed to produce the late payment, the best method to get them to pay your invoice is by using DCBL.

DCBL are the UK’s largest debt collection agency, achieving a 98% client retention rate as a result of our high success rates.

When a customer doesn’t pay, business owners are known to skip the debt collecting process, as it is perceived to be more complicated than it is worth.

This couldn’t be any further from the truth, and DCBL’s industry-leading “One Solution” service is straightforward and effective.

For over two decades, hundreds of thousands of businesses and individuals across the UK have instructed us to recover invoices from clients who refuse to pay.