Invoicing

Take a look at our three guides to help you review your invoice terms and prevent or recover late payments.

Review invoice terms

Make sure invoices include the right information as required by law. Also review your terms and conditions to ensure you clearly set out pertinent details such as payment terms, credit limits, or your right to charge interest on late payments. Obtain explicit customer agreement of your terms and conditions.

Are your payment terms too flexible? Commonly used terms range from payment upon delivery to seven to thirty days, or longer. Tightening terms can improve cashflow, but remember, credit can be a valued customer benefit; in such cases it is important to strike a balance between your needs and your customers’.

More info – Invoicing and payment terms

Preventing late payment

Getting your terms and conditions in order and obtaining customer agreement are key steps for preventing late payment. If your customers agree to specific terms, they might feel less inclined to break them.

To lower the risk of late payment you may wish to run credit checks on all customers, or on specific customers where you are wary of their ability to pay. If credit checks are unsatisfactory, tighten your invoice terms.

Quickly issue invoices. Prompt invoicing reduces the total time you are awaiting payment, and signifies that you are professional in your approach to invoicing and thus you expect a similar courtesy from your customers. Issuing friendly and timely invoice reminders could also help to prevent accidental late payment.

More info – Preventing late payment

Recovering late payments

Strong communication is often the most effective start to late payment recovery. Be professional, fair and firm. Find out why payment is late and when your customer expects to pay. Sometimes you might choose to offer flexibility, but do this on your own terms and ensure a payment deadline is agreed. If necessary, remind customers of your terms and conditions, and that you may decide to charge interest on late payments.

You have a statutory right to charge interest on late payment of invoices. Such a course of action could deter further delays, or represent a means of compensating you for the inconvenience and costs of late payments.

You may ultimately need to pursue legal action. Make sure you have a plan of action in place should the need arise, so that you can act decisively, quickly and effectively.

More info – Recovering late payments / Tool – Calculate the interest due on an unpaid debt