By Magnus Williams

There is a particular kind of silence that small business owners know well. It’s the silence of an invoice that was due 30 days ago. Nobody has refused to pay. Nobody has said anything at all. The money just hasn’t arrived, and you’re starting to wonder whether the customer moved to Portugal.

Late payment is one of the most common cash flow problems for UK small businesses, and one of the most awkward to deal with. Push too hard and you risk a good client. Don’t push at all and you’re effectively running a free lending service.

The good news is that there’s a middle path. Most late payers aren’t villains. They’re disorganised, busy or waiting on someone else’s approval. A calm, steady process gets most invoices paid without damaging the relationship.

Start before the invoice goes out

The easiest late payment to fix is the one that never happens. A few habits make a big difference.

Agree payment terms in writing before you start work, not on the invoice afterwards. If the customer has signed off on 30 days, it’s much easier to remind them of it.

Find out who actually pays. The person who hired you is often not the person who processes invoices. Ask for the accounts contact and any purchase order number at the start. Many invoices sit unpaid simply because they were sent to someone who forwarded them into the void.

Make the invoice easy to pay. Include your bank details, the due date in bold, the PO number and a clear description of the work. Every question the accounts team has to ask is another week’s delay.

A polite, predictable sequence

When an invoice does go overdue, a set routine takes the emotion out of it. It also means you’re not deciding from scratch, every time, whether it’s “too soon” to chase.

A simple sequence looks like this.

A few days before the due date, send a friendly heads-up. Something like: “Just a quick reminder that invoice 1042 is due on Friday. Let me know if you need anything from me.”

On the day after the due date, send a short, neutral reminder with the invoice attached again.

A week later, pick up the phone. Email is easy to ignore. A polite call to the accounts team often reveals the real problem in 30 seconds, whether that’s a missing PO number, an approval stuck with someone on holiday or a cash flow issue on their side.

After two or three weeks, put it in writing more firmly. Restate the amount, the original due date and what you’ll do next if payment doesn’t arrive.

Throughout, keep the tone factual and friendly. You’re not accusing anyone. You’re helping them do something they already agreed to do.

Know your rights, even if you never use them

UK law is more on your side than many small businesses realise. Under the Late Payment of Commercial Debts (Interest) Act 1998, a business can usually claim statutory interest on late payments from another business at 8% above the Bank of England base rate. You can also claim a fixed sum towards recovery costs: £40 for debts under £1,000, £70 for debts up to £9,999.99 and £100 for £10,000 or more.

You don’t have to claim any of this. Many owners choose not to with good customers. But mentioning it, calmly, in a final reminder often moves an invoice to the top of the pile. If things go further, the government’s Money Claim Online service lets you start a claim for a fixed sum without hiring a solicitor.

Check the latest figures and guidance on gov.uk before you rely on them, since rates and procedures can change.

Use tools so you don’t have to remember

The hardest part of credit control for a small business isn’t knowing what to do. It’s remembering to do it while also running everything else.

Most accounting software can send automatic reminders on a schedule. Use them. Set up the sequence once and let it run. If you work with SI agents, they can go further. They can watch for overdue invoices, draft the reminder in your tone, prepare the call notes and flag which customers need a human conversation rather than another email. The judgement call about a valued client stays with you. The admin doesn’t have to.

Know when to let a customer go

Most late payers improve once there’s a clear, consistent process. A few don’t. If a customer is always late, always has a reason and always needs chasing, it’s worth asking whether they’re really profitable once you count the time.

You can ask for deposits, shorten terms or require payment upfront for future work. Some customers will accept that. Some will leave. Either outcome is better than another quarter of chasing.

Getting paid on time isn’t about being tough. It’s about being clear, early and consistent. Your best customers will respect that. The others will at least know where they stand.

About the author
Magnus Williams is Head of SI Agents at Magnus, the SI Agent Store for founders and small teams, where many of the agents are based on real people, including experts and military veterans.