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Flaky clients – a step by step guide to dealing with late payments – Part two

Posted by: Intouch | 06.06.16

Intouch Accounting

Dealing with late payments – part two

As a contractor or freelancer, one of your main gripes will probably be late payments from clients. They promise to adhere to your payment terms and conditions, you complete the contract on time and then payment never seems to arrive when expected…


In last week’s blog we explored the steps you can take to prevent late payments and how to ensure your client is aware of your payment terms. In this blog we take a look at what you can do if you happen to find yourself dealing with a late paying client.


What to do if your client doesn’t pay on time:


1. Frustrating? Yes, but remember to keep your cool. Firstly, send a polite, straightforward reminder. Tell them you expect payment within 7 days and ask them to give you a date on which you can expect to receive it.


2. Phoning the client may mean you get paid more quickly. Whatever excuse the client gives (lost in spam folder, accidentally deleted etc), sympathise with them, as the excuse may be genuine. It’s not worth losing your professional reputation over. Calmly remind them of the due amount and ask them when payment will be made.


3. Keep a record of any expenses you’re incurring as a result of the delayed payments and share it with the client, so that they’re aware of any penalties accruing.


4. If there is a legitimate reason for non-payment, you may consider arranging payment in instalments. Depending on your circumstances, this could be better for you than no payment at all.


5. If your first reminder hasn’t had the desired effect, it’s time for another. State that it’s your second reminder, how much you’re due and how many days late the payment is. Make it clear when you expect to hear from them with a resolution and if you have included a late payment clause in your contract, remind them of it. If this clause has begun to rack up a charge, let them know the running total.


6. The Late Payment of Commercial Debt (Interest) Act (1988) was amended in 2002 to include fixed penalties in addition to interest. Make it clear that you will enforce this if an account becomes overdue.


7. If it’s looking like you’re going to lose out, your contractor insurance provider should be able to advise you on what to do.


8. If you believe there’s no hope of payment, you can get a solicitor or online debt recovery firm to issue a “letter before action” which threatens (politely!) to commence wind up proceedings if payment is not received in X days. This should cost under £10.


9. See the GOV.UK guide to late payment legislation for useful information on your options if you’re owed money.


And what NOT to do!

But before you do, read the following 6 steps, to help you keep your temper.


1. Don’t lose your cool! Remain professional however annoyed you feel
2. Do not vent your anger on social media – it could really damage your professional reputation

3. Never threaten the client

4. Ensure communication between both parties doesn’t break down

5. Don’t agree to more work with them unless payment has been made

6. And most importantly! Never lose your passion for contracting – don’t let one bad client put you off


If you follow these guidelines, especially those in part one regarding preventing late payments, you should not have to deal with too many non-payment situations but, if you do, we hope you now have the tools to deal with them confidently.


This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.