Chase a payment

It’s often possible to deal with overdue payments by chasing informally - especially if you can find strategies that work for your business.

Establish a process for chasing

It can feel uncomfortable to chase a customer for money. However, setting up a timetable for monitoring all payments can make it feel more businesslike and less personal.

It’s also worth trying to get a contact in accounts. Find out who to speak to and what information they will need to process your invoice.

What works for other small businesses

Some businesses use a calendar to timetable when to contact customers at each stage of chasing, or they use accounting software to automate it.

Here’s an example – adjust these steps to suit your business, and the way you work with your customers:

Before you send an invoice

Get a contact in accounts

Find out who to speak to and what they need to process your invoice.

Day you send the invoice

1 or 2 days after sending an invoice

If it's a new client or slow payer, confirm they received the invoice. Check it includes the information they need.

10 days before payment is due

It's sometimes worth checking that your invoice is processed and due to be paid. Ask if it's 'in the system' or 'on the next pay run'.

day payment is due

1 or 2 days after it becomes overdue

Check if there's a problem that's prevented payment. Find out what you can do to resolve it.

At regular intervals up to 30 days overdue

Remind them it's overdue - if you stay in touch, the problem might become clearer. Decide whether to escalate.

30 days overdue

Warn them about the next steps you'll take if it's not paid.

Add checks to your chasing process

Do some checks to see if the customer is likely to pay you.

If they have bad debts or a history of refusing to pay what they owe, it’s a good idea to escalate or take next steps earlier than usual.

Depending on what you want to check, you can:

Strategies when contacting customers

As a small business, customer relationships are probably important to you. However, there are strategies you can use that will help you maintain good relationships, even when you’re chasing a payment.

Be polite but firm – if you’ve supplied the goods or services, you should be paid. Develop strategies that work best for you and your customers.

Examples of strategies used by other businesses:

Make the first contact by email or text

If you regularly get in touch before the due date to check if invoices are received or processed, set up a polite template email or text as a gentle reminder.

“Some people don’t like being chased by phone when the invoice is not yet overdue. It does interrupt your day, and that can sometimes not go down well. Understanding those subtleties can be good.”
– finance director

Change who does the chasing after a couple of contacts

It can give the impression of escalation, even if the new person isn’t more senior in your business.

Develop a relationship with the customer's accounts department

If you can, talk directly to the person who processes payments to find out what the problem is.

“Often, if we suddenly find we’re not getting paid, it’s because a new person’s taken on the role and they suddenly want something different. So we proactively try to talk to somebody. We usually ask, ‘Where is it stuck?’ At that point we will ring whoever we are contracted with in that company and say, ‘Can you please do something about this?’”
– consultancy firm director

Side with the customer

Explain to your contact that you value them as a customer, but their accounts department is creating a problem for your business.

“You go back to the person who agreed the deal. I say, ‘I’ve done my part but accounts are not doing their job, and that’s putting our relationship under pressure.’”
– small business owner

Be ready for delaying tactics

Think ahead about what your customer might do. For instance, if they ask you to make a small amendment to an invoice, be clear that the original invoice date and payment terms still apply – otherwise, they might try to ‘reset the clock’.

Hire someone to chase payments

You can stay focused on customer relationships if someone else does the chasing in your business.

“I’m terrible at chasing because I’m a nervous business owner who just wants to make another sale, so I hate asking for money. During the growth of the company the biggest advantage we had is that I employed an office administrator who likes getting the money in and doesn’t want to be messed about.”
– farmer and cider producer

Ways to escalate when chasing

When your regular process for chasing hasn’t worked, it can help to:

    • speak to someone more senior in your customer’s company
    • remind them that you can charge interest from the payment due date
    • warn them that you’re considering stopping supply until they pay
    • check if they signed the Prompt Payment Code – if they’re not paying undisputed invoices within 60 days and working towards paying within 30, you can make a challenge that will be investigated by the Chartered Institute of Credit Management

“I did threaten that I would add interest and back-charge for the 25 days of it being late. Funnily enough, they paid the next day.”
– consultancy firm director

You might want to speak to the customer first, then put it in an email or letter. If you decide to take further action later, you might need to show how you tried to solve the problem.

Next steps if chasing hasn’t worked

Consider what you’re prepared to do if escalation doesn’t solve the problem.

It can help just to tell your customer about next steps you’re considering. If you’ve already warned them about charging interest or stopping supply, then acting on that could be your best next step.

If you’ve not had any success, you can choose your next step – whether that’s getting some specialist advice, negotiating a solution with the help of a mediator, or making a court claim for the money.