Late Payment Shock: The left and right hands

All week we’ve been reporting on the recent BBC Radio Solent interview with Gosport businessman Peter Darcy, and today we round things off by looking at his comment that “the left hand doesn’t know what the right is doing” in many firms – particularly those that have recently changed ownership.

Disorganisation of all kinds poses a threat to invoicing, and a mislaid email or paper invoice can quickly lead to late payment, or even to total non-payment, while making it even more difficult to track down the individual responsible.

It’s not just large, sprawling firms that can misplace invoices, or small companies that can suffer a breakdown in communication between your point of contact and the accounts department – any time more than one individual is involved in the process, however small the team, there is the risk of miscommunication.

However, many of the methods we’ve already looked at this week can help to keep things on track.

Order from Chaos

While you can’t control what happens once your invoice is delivered to the client, you can take reasonable measures to retain some sense of order over the process.

Keep clear records of when you invoice your clients – if your own records include precise dates of when invoices were issued, it will be much easier to demonstrate when they become overdue.

Again, confirm receipt when they reach the client, and ensure that there are no immediate objections to the deadline you have stated.

When that deadline arrives, if payment has not been forthcoming, contact the client to rearrange payment.

Firm but Fair

Depending on the client, your long-term relationship with them, and their value to your business, you may want to insist on immediate payment of overdue invoices, or you might be willing to rearrange payment for a later date.

Either way, it’s best to stick to fairly strict rules – only rearrange the deadline once, and make clear that further extensions will not be permitted.

If the client commits further late payment, you may want to consider stronger measures – freeze any active accounts they have with you, or deny them any further requests for rescheduled payment, until the full outstanding amount is settled.

Credit Control and Contentious Clients

Despite your best efforts, you won’t always get payment on time from every client. That’s why it’s important to have a system in place to tackle late payments.

The measures we have discussed this week give you a starting point – and the basic principle is to make sure you’re organised, so you know where you stand with any awkward clients.

However, if you find you need a little assistance, we can help you, from organising your invoicing from the outset, to ongoing credit control that turns your payments processing into a two-way, open collaboration with the client.

For those few persistent non-payers who insist their invoice was settled months ago, but whose money still hasn’t landed in your account, appropriate legal proceedings may become necessary – and this is where our solicitors can help to determine the best approach to take, in order to receive the funds with the minimum of fuss.

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