Table of contents
Table of contents
Dealing with overdue payments can feel awkward, but it’s something pretty much every business owner and freelancer will face at some point.
It doesn’t have to be stressful though! We’ll go through some of our favourite strategies for handling overdue invoices with confidence (whilst hopefully reducing the need for those phone calls we all hate making).
Overdue payments can be a real headache because cash flow is the lifeblood of any small business. It makes it so much harder to pay your own bills on time when clients don’t pay on time. After all, you’ll need to cover costs like rent, supplier invoices or wages whether you get your money before they’re due or not!
Unlike larger companies, small businesses don’t often have the financial buffer to absorb these delays, which can mean unnecessary stress. Plus, chasing payments takes up valuable time and energy that could be spent on more productive tasks, like growing your business. Or more fun things like staring into space with no thoughts at all.
The best way to chase payment is to start with a friendly reminder as part of your invoicing process before the due date even arrives – as long as it hasn’t already been paid of course! Sometimes clients simply forget, so sending a polite email about the approaching due date can be enough.
If it doesn’t do the trick, you could schedule further reminders as time passes. Be clear and direct – mention the invoice number, the amount due, and include an easy way for them to pay. Ask if they have any questions or issues too. Keeping the tone light and understanding shows you’re professional while still expecting prompt action.
It’s up to you how you word these reminders, and there are lots of templates online (and built into Pandle or you can use your own wording) which can help. A polite approach tends to be more successful! You could also ask them to discuss any issues they might be having. If they’re genuinely struggling then you might decide to agree a repayment plan with them, rather than losing out entirely.
Offering a range of payment options can sometimes help speed things up too.
Make it clear that payment is overdue and this should be resolved as soon as possible.
You might also want to give them a new deadline to encourage quicker payment or if you plan to take further action. If you don’t hear back after a couple of tries, don’t hesitate to pick up the phone – sometimes a quick conversation is all it takes to get things moving. The key is to stay calm, professional, and consistent in your follow-ups. They don’t need to know what happens once you hang up.
If your client still hasn’t paid after a few polite reminders, it’s time to get a bit more assertive. Consider sending a final notice, clearly stating the amount due, the original invoice details and a new payment deadline. Let them know that if their payment isn’t received by this new date, you may have to take further action. Sometimes, just the mention of “further action” can encourage clients to prioritise your payment.
If that still doesn’t work, you could consider getting legal advice or bringing in a third party like a collections agency or mediation. It’s not ideal, but it can be an effective last resort.
Another option is filing a claim through the small claims court, especially if the amount is higher. But with a bit of luck your client will hopefully settle up before it gets to that point. Just remember to stay calm, document all communications and be consistent in your follow-ups – most clients will eventually pay once they realise you’re serious.
If your client still hasn’t paid after multiple reminders and a final notice, it might be time to consider the small claims court. As a general rule, this should be a last resort after all other options have been exhausted, including offering payment plans or seeking mediation. The small claims court is typically used for smaller amounts and it’s a straightforward process, but it’s worth making one final attempt to settle things amicably before taking legal action.
The Prompt Payment Code (PPC) can be a real game-changer for small businesses. It’s a voluntary scheme designed to promote fair and timely payments between businesses.
When a client signs up for the PPC, they’re agreeing to pay their suppliers on time, which generally means within 30 days. For small businesses in particular this can make a huge difference to cash flow, helping you avoid the stress of chasing late payments and making it easier to plan and budget. Knowing a client has committed to these standards can give you extra confidence when working with them.
You can find out more about the Prompt Payment Code on the Small Business Commissioner website.
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A content writer specialising in business, finance, software, and beyond. I'm a wordsmith with a penchant for puns and making complex subjects accessible.
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