Dealing with Late Payments: Practical Advice for SMEs

Late payments – the frustration every small business owner knows far too well. You’ve done the work, sent the invoice, and then... silence. Days turn into weeks, and chasing payments starts to feel like a full-time job.

If it’s any comfort, you’re not alone. At Navigate, we work with SMEs across Derbyshire and Yorkshire, and late payments are one of the biggest headaches we see – even for businesses that are otherwise thriving.

But while you can’t always stop late payers entirely, there are a few practical steps you can take to manage the problem without losing sleep (or your temper).

Set clear terms from the start

It might sound obvious, but a lot of payment issues start with vague or overly casual agreements. Be crystal clear about your payment terms – when invoices are due, what happens if they’re late, and how payments should be made.

And don’t just stick the terms on the invoice – talk about them upfront. It sets the tone and makes expectations clear from day one.

Invoice promptly (and correctly)

The quicker you send the invoice, the quicker you can expect payment. Simple, but easily overlooked when you’re busy.

Make sure your invoices are accurate, include all the right details (like purchase order numbers if needed), and are sent to the right person. A surprising number of late payments happen because the invoice ended up in the wrong inbox.

Make it easy to pay

The more hoops clients have to jump through, the longer they’ll put it off. Offering different payment options – bank transfer, card payments, even direct debit – removes friction and gives people fewer excuses to delay.

If you’re still sending out PDFs and asking people to ‘pay when they get a chance’, it might be time for a rethink.

Chase politely – but persistently

Nobody loves chasing money, but a polite, firm reminder can work wonders. Start with a gentle email a few days after the due date, and follow up with a phone call if needed. Keep it friendly, but clear – you’re a business, not a charity.

There are plenty of online tools that can automate reminders without sounding robotic. A well-timed nudge often gets invoices paid before things get awkward.

Know when to escalate

If polite nudges aren’t working, don’t be afraid to escalate. Late payment interest is a legal right for businesses, and sometimes mentioning it can encourage quicker action. In serious cases, a debt recovery service might be worth considering – though it’s usually a last resort.

The key is to have a process and stick to it. It protects your cash flow and shows you mean business.

Chasing payments is never the most glamorous part of running a business – but staying on top of it is vital for keeping your cash flow healthy and your stress levels low.

Closing thoughts

At Navigate, we help small businesses aput proper systems in place to deal with late payments – so you can spend less time chasing and more time growing. If you’re ready to take the pressure off, we’re just a call away. Contact us on 01709 589 439 or book a call with our team.