{"id":4651,"date":"2018-06-26T10:00:55","date_gmt":"2018-06-26T09:00:55","guid":{"rendered":"https:\/\/www.sage.com\/en-gb\/blog\/?p=4651"},"modified":"2026-01-29T10:35:43","modified_gmt":"2026-01-29T10:35:43","slug":"late-payments-rules","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-gb\/blog\/late-payments-rules\/","title":{"rendered":"5 late payments rules you need to follow to get paid"},"content":{"rendered":"
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\n\t\t\t\t\t\t\tMoney Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t
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\n\t\t\t\t\t\t5 late payments rules you need to follow to get paid\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t

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\n\t\t\t\n\t\t\t\t\"\"\t\t\t\tMartin McTague<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n

It\u2019s important that those outside the small business community try to understand what keeps us, as entrepreneurs, up at night \u2013 and late payments is one of them.<\/p>\n\n\n\n

As a business owner myself, and an elected Director of the Federation of Small Businesses, I am keenly aware of the issues that small businesses and those who are self-employed face when simply trying to find work and get paid for a job well done.<\/p>\n\n\n\n

In the commercial world, people often kick off conversations with the latest set of corporate results or the government\u2019s newest business-focused initiative.  Beneath the headline-grabbing business news stories, though, the thorny issues that occupy us day-to-day can go under the radar.<\/p>\n\n\n\n

Chief among these is cash flow<\/a>. And, more specifically, a UK late payment crisis that now sees \u00a314bn withheld from small firms by businesses that don\u2019t pay on time.<\/p>\n\n\n\n

The problem is worse here than anywhere else in Europe. Around 5p in every \u00a31 of UK revenues has to be written off due to poor payment practice. That\u2019s compared to 4p in Greece, 3p in Romania and less than 1p in Finland. This has human consequences \u2013 for ourselves, our businesses, our employees and indeed our families.<\/p>\n\n\n\n

If you\u2019re not sure if or when you\u2019re next getting paid, that causes a lot of stress.  Then there\u2019s the economic impact: the time and effort we spend chasing money owed should be spent running our businesses.<\/p>\n\n\n\n

The latest research from Sage shows that smaller UK firms spend an astonishing 15 days a year chasing late payments<\/a> on average.<\/p>\n\n\n\n

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The Domino Effect: The impact of late payments<\/h2>\n\n\t\t\t\t\t\t\t\t\t
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Get our global research report to uncover why customers pay late, the impact on businesses and what you can do to tackle the problem.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\tDownload the report<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\"\"\t\t\t<\/div>\n<\/div>\n\n\n\n

So how can we avoid getting caught up in the invoice waiting game? Here are five late payments rules to follow to help ensure you\u2019re paid sooner rather than later.<\/p>\n\n\n\n

1. Research your buyers <\/strong><\/h2>\n\n\n\n

Before signing on the dotted line, research potential clients to see if they have a track record of poor payment. The UK government now requires the biggest businesses to report on their payment practices. These reports are available to search online<\/a>.<\/p>\n\n\n\n

More than 1,000 large companies have so far started to report on how they pay, and thousands more will follow suit over the coming months.<\/p>\n\n\n\n

Reference agencies such as Experian will conduct credit ratings for a small fee. These are a good way to get a sense of how bigger firms treat suppliers.<\/p>\n\n\n\n

2. Make payment terms clear<\/strong><\/h2>\n\n\n\n

Ambiguity around payment terms<\/a> has to be avoided at all costs. If you expect to be paid within 30 days, make that crystal clear when drawing up agreements. Equally, leave your buyer in no doubt that practices such as retrospective discounting, where big firms decide to pay less than agreed simply because they\u2019ve paid on time, won\u2019t be tolerated.<\/p>\n\n\n\n

It\u2019s also a good idea to send payment instructions and deadlines alongside invoices when they\u2019re issued<\/a>. Setting up user-friendly online and card payment facilities can also help avoid delays.<\/p>\n\n\n\n

Ultimately, you\u2019re looking to pre-empt any excuses your clients might try and muster for paying late.<\/p>\n\n\n\n

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3. Provide timely reminders and know the law <\/strong><\/h2>\n\n\n\n

Setting up automated emails to clients to remind them when payments are due can nudge them into settling invoices more promptly. It\u2019s also important to be aware of legislation in the space, such as the payment terms set out in the Public Contract Regulations<\/a>.<\/p>\n\n\n\n

Cost effective legal support is also out there to help tackle repeat offenders. In a lot of cases, a letter from a solicitor is enough to make late payers change their ways.<\/p>\n\n\n\n

4. Make late payers pay  <\/strong><\/h2>\n\n\n\n

You have the right to charge interest on invoices the moment they become overdue. Use it. FSB research shows that eight in 10 small firms don\u2019t charge interest on late payments. That needs to change.<\/p>\n\n\n\n

It can be a daunting prospect to take this kind of action against important clients. However, you need to remember that, if payment terms have been made clear, you\u2019re only taking the kind of fair, commercially savvy action that would be returned if the boot were on the other foot.<\/p>\n\n\n\n

If clients expect work to be done on time, payment should be made on time.<\/p>\n\n\n\n

5. Don\u2019t be afraid to speak out <\/strong><\/h2>\n\n\n\n

We can\u2019t hope to change our endemic poor payment culture unless we\u2019re prepared to call out bad practice.<\/p>\n\n\n\n

Appointed towards the end of 2017, the Small Business Commissioner has been tasked with bringing our late payment crisis to an end. As part of his efforts, he\u2019s established a dispute handling service<\/a>, which provides assistance to small firms who are not being paid on time.<\/p>\n\n\n\n

If you have been affected by late payments, don\u2019t hesitate to reach out to the Commissioner. The late payment crisis<\/a> will not climb up the national agenda unless we as small businesses are vocal on the issue.<\/p>\n\n\n\n

It\u2019s hard to avoid being stung by late payers<\/a> at some stage during your firm\u2019s development. But following these five steps can help you steer clear of the waiting game.<\/p>\n\n\n\n

Too many big businesses don\u2019t play fair. Adopting the right tactics, however, can ensure you aren\u2019t left waiting for the cash you\u2019re rightfully owed.<\/p>\n\n\n\n

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The Art of Being Paid<\/h2>\n\n\t\t\t\t\t\t\t\t\t
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Chasing invoice payments doesn\u2019t have to be painful. Use this kit to answer a few questions about your customers so you understand their payment drivers, then read our advice on how to flex your style for each, calling techniques and much more.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\tGet your guide<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\"\"\t\t\t<\/div>\n<\/div>\n\n\n

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Subscribe to the Sage Advice newsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t
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Join more than 500,000 UK readers and get the best business admin strategies and tactics, as well as actionable advice to help your company thrive, in your inbox every month.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\tSubscribe now<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\"\"\t\t\t<\/div>\n<\/div>\n\n

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