Knowing how to manage late payments are one of the biggest frustrations for small business owners, particularly if you’re VAT registered and trying to keep on top of cash flow, supplier costs and tax obligations.
This guidance was written by our Practice Director, Deborah Edwards, and featured in a recent article in The Times.
As featured in The Times
At Harland, we’ve seen first-hand that improving your approach to late payments isn’t just about sending more reminders. It’s about setting expectations clearly, using the right tools, and making sure your internal systems are working for you. This article is designed to help you move away from reactive chasing, and instead build simple, proactive systems that make a real difference.
Here are six practical strategies that can help…
1. Set your payment terms early, and repeat them
Stating your payment terms in your contract is essential, but that alone often isn’t enough. Reinforce your terms when you confirm the work, when you send the invoice, and even when you thank the client. Clear and consistent communication helps position payment as a priority, not an afterthought.
2. Use tech to nudge, not nag
Invoice software like Xero can send friendly, personalised reminders automatically. Often, late payment is just a case of someone forgetting. Automated nudges help reduce the need for awkward conversations. But when you do need to chase, don’t be afraid to do it personally. In many cases, the businesses that follow up quickly are the ones that get paid first.
3. Change how you follow up
Instead of asking, “Can you pay this now?” try a softer but more effective approach. Something like, “Just checking this hasn’t got lost. I need to reconcile our accounts today” is more likely to prompt a response. Make sure you’re speaking to the right person too. The person who received the invoice may not be the one who processes the payment.
4. Mention interest on late payments, even if you don’t plan to charge it
Including a clause about late payment interest in your terms can be a useful deterrent. You don’t have to enforce it every time, but knowing it’s there gives you a stronger position if a payment drags on.
5. Build slow payments into your cash flow model
Rather than hoping for the best, plan for some payments to be late. We help clients create rolling forecasts and build buffers into their cash flow so they’re not caught off guard. You can also offer incentives such as small discounts for early payment if that works for your pricing model.
6. Ask for payment up front when it makes sense
This is one of the most effective changes you can make. Many small business owners assume they have to offer credit, but that’s not true. Don’t be afraid to ask for payment in advance, especially if you’re working with a new customer or someone who’s previously paid late. Direct debit options and credit checking can add extra protection, though they won’t suit every business.
Need help getting your invoices paid on time?
If knowing how to manage late payments are putting pressure on your cash flow, we’d love to help. At Harland, we make it easier for small businesses to get paid faster and more consistently, using smart systems and practical advice that fits the way you work. Get in touch with us to find out how we can support you.
