• Startups
  • June 17, 2020

5 Tips For Better Credit Control For Your Small Business

Managing the impact of late payments is a way of life for the thousands of UK small firms who trade business to business. Here are some worrying statistics from The Forum of Private Business:

Poor payment practice costs UK businesses £20bn every year Small firms are each owed an average of £39,000 at any one time 1 in 4 businesses go insolvent due to invoices being paid late. As a business owner you need to make sure that you have enough cash coming in to pay your staff and meet your bills. Not everyone pays promptly which is why it’s crucial to have a system for managing, chasing and finally collecting your invoices each month.

We’ve put together 5 simple tips to help ensure your business doesn’t become an insolvency statistic due to late payments:   

1)      Set clear payment terms Start off on the right foot by setting clear payment terms for every client. You should make sure that both you and your client understand what work you are doing, how long it will take, how much it will cost and when you’ll be raising an invoice for payment. Whatever your process is, make sure you document it and include it in your terms of work. This is good practice to avoid misunderstandings in the future.   

2)      Invoice faster- get paid faster When you invoice quickly you’re giving a clear sign that getting paid matters. It might be a pain, but get in the habit of invoicing as soon as you deliver. If you tend to bundle up all your admin once a month then there could be a significant lag between when you deliver and when you invoice. You might be inadvertently communicating that there’s no rush to pay. Make sure your behaviour matches your terms and be prompt about raising invoices.   

3)      Schedule reminders Just like the point on invoicing faster, this is about making sure your behaviour matches your words. Check regularly to see what’s been paid, what’s about to come due, what’s due now and what’s late. Get into the habit of sending a friendly reminder email (or even a phone call!) a week before an unpaid invoice is due, and then again the day before. By doing this you're establishing clear expectations and boundaries and reinforcing the message that you expect to get paid on time.   

4)      Have a process to deal with late payers Whatever you do, chances are you’ll end up with a late payer at some point. Having a clear process that you follow every time can make this much less stressful. The best starting point is to pick up the phone and talk to your client. Aim to understand why they haven’t paid and to get a clear commitment as to when they’ll settle their invoice. You can explain that you have a standard escalation process, for example perhaps you’ll charge interest on overdue amounts or stop ongoing work until previous invoices are settled. In more serious cases you may even consider getting legal advice on debt recovery or handing invoices over to a debt collection agency. Most importantly make your client aware that you have an escalation procedure and you will follow it.   

5)      Send a thank you note No matter when your client pays you, it’s a good habit to send a quick thank you note for the payment.  This serves two purposes: it lets you end the job on a positive note, and it confirms that you’ve received payment. In the right circumstances you could also use it as a chance to pitch for more work.

 Asking for money is never easy, nor is it anyone’s favourite job. If we had to sum up our advice into a single word it would be this: process. It might sound like hard work but having clear processes that work for you will save you time and energy on chasing your money. Set some time aside, establish tactics that work for you and start getting paid faster!   Emily Trant - Check Business. Powered by data from Equifax, Check Business lets you see risk and stability scores for UK businesses, partnerships and sole traders.       

Journey further...

How LawBite works

LawBite legal documents

Expert business law advice

In closing

Nothing in this article constitutes legal advice on which you should rely. The article is provided for general information purposes only. Professional legal advice should always be sought before taking any action relating to or relying on the content of this article. Our Platform Terms of Use apply to this article.

Related Articles

Read more of our latest blog posts, featuring all the latest legal news, analysis and opinion from our expert lawyers.

blog image
  • By LawBite Team
  • May 01, 2022
What are Articles of Association?

Setting up a limited company is one of the most common routes entrepreneurs take when they start their business. If you have decided to take this r...

blog image
  • By LawBite Team
  • May 01, 2022
Do I need a privacy policy on my website?

The short answer is yes, all businesses that process personal data must have a detailed privacy policy. In most cases, a privacy policy will sit on...

blog image
  • By LawBite Team
  • April 13, 2022
Understanding Conflict of Interest (COI)

One thing our lawyers consistently emphasise to our clients is the importance of having well-considered and expertly drafted documentation, for exa...


LawBite can help you

LawBite is on a mission to provide business legal advice that is easier to access, clearer to understand and much cheaper. Our on-line legal advice platform can quickly connect you with expert business legal advice. Our friendly, highly qualified business lawyers, solicitors and mediators will give you the guidance and reassurance that comes from customised legal advice for small and medium sized business.

Whether you are bringing or defending a legal claim, outsourcing work, want a business contract review to ward off disagreements, talk to an expert trademark lawyer, resolve a contractual dispute with methods like mediation and arbitration, or getting your new company set up and on the right footing with a robust shareholder agreement and GDPR standards, we can help you succeed.

defend a claim

Talk to a Lawyer

Book a Call
defend a claim

Essentials Plan

Join for Free