4R Blog

RSS Feed

How to encourage customers to pay on time

Date Added: 20/12/2013  

Late payments are probably the biggest issue for UK SMEs. 

Research from the payment organisation BACS says that small to medium-sized enterprises (SMEs) are owed an astonishing £35 billion in late payments, which is equal to £45,000 per company.

There are steps that can be taken to encourage customers to pay on time, every time.

1) Make sure you know your customer

It is always a good idea to look into a customer’s financial situation and background before you agree to do any kind of business with them - just to make sure you know who you are dealing with.

You can get your hands on a plethora of information that is available to the public -  a few places to go are Companies House and the Insolvency Register.

It is also a good idea to obtain trade references and ask your industry contacts if they’ve had any dealings with the customer.

2) Make sure an invoice is sent

Sending an invoice promptly could motivate a customer to pay on time. 

Ensuring all the information outlined on the invoice is correct is also extremely important. 

Any administrative errors could mean the invoice is returned, ultimately delaying the payment.

3) Good communication is key

Strong communication is an effective way of reminding your customers to pay in a timely manner.

Always send customers payment reminders by phone and email a few days before the due date - this could work as a gentle reminder that money is expected soon.

If the payment becomes overdue, don’t be afraid to get on the phone straight away and enquire as to why the money is late.

SMEs can become hesitant to contact customers they have good working relationships with, but these steps have to be taken in order to protect the business.

If all else fails, you are entitled to take court action

How you proceed depends on how much you are owed. For debts less than £5,000 you can go through the smalls claims process, details are here, or you can make a claim online.

Claims for unpaid bills between £5,000 and £25,000 must be issued in a county court and claims for more than £25,000 can be taken to the high court.

Get the Help You Deserve

0800 90 20 123

Urgent Help Call 24/7

020 7183 2606

We'll Call You

Request a Callback