Stop late invoice payments with these 10 simple steps

November 29, 2021

Getting a late invoice paid can feel like walking through a minefield. You want to get paid for your services, but you also want to protect the relationship you have with your client. Upset your customer and you might not see them ever again.

You would expect most businesses to pay their bills on time, but a staggering 39% of invoices were paid late in 2020.

When you do have an overdue invoice, getting it settled can be a long and arduous process. Writing formal letters, using debt collection agencies or taking debtors to court will drain your time and your money.

When businesses enjoy the late payment of commercial debts, you are essentially acting as a creditor providing your client with a cheap form of finance with no interest charges.

Avoid this completely by making sure you process your invoices in the right way. You’ll cut down on waiting times and get your money as soon as possible.

Table of contents

  1. Discuss payment terms
  2. Use digital invoices
  3. Create clear invoices
  4. Send prompt invoices
  5. Find the right person
  6. Confirm receipt
  7. Offer a variety of payment options
  8. Send reminders
  9. Consider fees and discounts
  10. Thank your customer

1. Discuss payment terms

Whether you're a freelancer, sole trader or major multinational, before you embark on any work for your client, have a quick discussion as to how you want to be paid for your services.

Your payment terms might not work for your client, and you may also find the way they operate doesn’t work for you.

Corporate companies can have extremely long wait times, which may not be suitable if you’re a small business with limited cash flow. Or perhaps your customer wants to make card payments, but you don’t offer this facility.

Whatever potential pitfalls there are, it is best to discover these before you have done any work for the client.

Ahmed Mir from Sip Coffee House says, “One way I like to ensure that businesses pay on time is to ask, "When and how would you like to pay?". I find that this encourages clients to pay faster as setting your own payment terms may sometimes not work with your client's situation.” 

2. Use digital invoices

Are you creating invoices using a template on a word processor and sending them through email? Worse still, are you printing out documents and sending paper invoices?

There is a range of invoicing, bookkeeping and accounting software on the market and there is no excuse for not upgrading to digital invoices.

“To ensure our clients pay invoices on time, we utilise an electronic invoicing system. We found that part of the reason for slow payments or non-payments in the past was that they were inconvenient. The process was slow and clients would put it off. With an electronic invoicing system, however, everything is done digitally and quickly. Clients can pay the invoices pretty much as soon as they get them, and if they still delay it, the software we use alerts them of the invoice’s deadline. Digital invoicing is the way to go, in my opinion, if you want to encourage your clients to make more prompt payments.” Sean Nguyen, Internet Advisor

At Pomelo Pay, we have integrated invoicing into our platform which makes creating, customising and sending out invoices simple. You can keep track of all your payments and outstanding invoices on one dashboard.

With digital invoices, invoice management becomes much more efficient through the storage of invoice numbers, customer addresses and previous orders. You will know where to focus your attention and identify the companies which give you regular problems.

Find out more: add payment links to invoices

3. Create clear invoices

“Invoices are basically a request for payment and will contain information such as your deliverables, the due date and agreed payment terms. Invoices are different from receipts, which are just a confirmation of payment.” What Are the Invoice Requirements in the UK?

One of the reasons invoices are paid late is because they are unclear. If customers have to do a bit of work to find out what the invoice is for or what its due date is, delays will occur.

Make use of digital invoices and half of the work will be done for you. Dates, purchase order numbers and identification numbers will all be filled in for you provided the customer is already registered in your directory.

All you need to do is fill in the essential information such as products and amounts. Create better, clearer invoices and you will get paid faster.

Find out more: what are UK invoice requirements?

4. Send prompt invoices

“To secure your cash flow and stay at the forefront of your client's mind, prepare and send your invoices as soon as possible. If you are in contact with them via text or other communication channels like Slack, you can notify them that you have sent your invoice. Busy people sometimes need a gentle nudge to give you priority.” Gergo Vari, Lensa

Once you have sent out a product or completed your service, send an invoice as soon as possible. If you delay sending an invoice, you are sending an implicit message that your payment can wait.

Should there be an issue with the invoice or your product, the financial controllers will need to investigate matters. If you have waited two weeks to send an invoice, you will be looking at a significant delay before you receive any money.

Larger companies tend to process payments periodically, say on a monthly basis. If you send your invoice too late for the current cycle you’ll have to wait an extra month. Send your invoice promptly and you may just get it settled before its due date.

5. Find the right person

According to Naheed Mir from Rug Knots, “The first reason invoices get paid late is because they never get sent to the right person within your client's organisation.”

When invoicing an SME, the payment process will be quite simple. When working for a larger company you may not have any contact with the person who controls the purse strings.

If you send an invoice to a generic company email it may get lost in an inbox somewhere. Likewise if the wrong department receives it, chances are it won’t reach the right person on its own.

Should you find that a particular company is always slow to pay invoices, speak to the company person you work with and ask them who is responsible for payments.

Once you have this information, send invoices to this person directly. If you still encounter delays you can speak to them and pinpoint why payments are slow.

6. Confirm receipt

Most companies don’t bother to confirm whether a customer has received their invoice. However, doing so provides a gentle reminder that a payment is due.

“Every business has trouble collecting from time to time. When I arrived at Mold Busters and saw several 90+ day old invoices, we immediately implemented a simple strategy to prevent these from happening. We call to ensure that the invoice is received, and ask when we can expect payment. It seems silly, but many companies never make certain that the invoice gets to the customer or make any collection calls until the invoice is aged.” Charles Leduc, Mold Busters

Once you have confirmed that the company has your invoice, you have eliminated one excuse for a company to use to delay payment. You can also add read receipts to your emails so you know exactly when correspondence has been opened and read.

7. Offer a variety of payment options

Friction occurs when companies can’t pay invoices the way they want. This creates delays which means you don’t get paid when you should.

Matt Brown from Hello Bonsai says, “It’s all about how you start with a client. Offer them a variety of payment options so they can make payments easily. Ensure you invoice clients in a timely and professional manner. Follow up and stay in touch with your clients.”

Relying on bank transfers may have been acceptable 10 or 20 years ago, but now, people expect a variety of payment options.

At Pomelo Pay, we process payments so we know how important it is to provide customers with all their preferred payment options. Doing so eliminates all the barriers that prevent customers from paying and increases the likelihood of a swift settlement.

We offer over 25 payment methods from cryptocurrencies (BitPay) to digital wallets (Alipay). Our platform also features remote links which can be combined with invoices.

Send customers a digital invoice that features a clickable way to pay and you will see waiting times plummet.

Find out more: discover QR codes

8. Send reminders

You would expect most businesses to chase invoices that haven’t been settled. Amazingly, a significant number of businesses don’t even track overdue payments.

The main reason holding businesses back is that they are afraid of damaging the company-client relationship.

However good customers cannot be upset about being asked to pay a bill. As long as you are polite but firm, you should never delay making a phone call or sending an email. 

With a digital invoicing platform such as Pomelo Pay, you can arrange automatic payment reminders when bills go past a certain point. You can also schedule notifications to alert you when invoices go unpaid for a particular period.

“Since clients may not pay the invoices immediately, we set up automated invoice reminding emails to be sent the day after the due date and follow up every 3 days after that.” Tim Sutton, CoffeeGeek TV

9. Consider fees and discounts

Considering that some businesses are reluctant to chase invoices on account of harming the relationship with the client, adding late payment fees to an invoice may seem like a high-risk strategy.

“Something that works quite well for us and getting clients to pay invoices promptly is putting a time limit for the payment to be made. After this time has been exceeded without payment, we charge late payment interest. It’s something that we’ve done for a very long time and make very clear in our policies when doing business with each individual. We clearly state the “pay by” date for each invoice when they’re issued and reiterate it after it has been sent. In addition, leading up to the final payable date before a penalty is charged, we’ll send our clients a reminder about the invoice and our policies for late payments.” Teri Shern, Conex Boxes

You should only start adding on penalty fees when a client is repeatedly missing payment dates. Such fees should also be emphasised to the client before any work begins to avoid any disputes.

If you’re unwilling to adopt such a robust approach, why not make discounts to encourage early payments. If you’re a small business owner that needs a capital injection, give your client a real incentive to pay that invoice.

“Offer, say a 10% discount, for invoices paid within the first two weeks or thirty days. For your clients on a better financial footing, they'll certainly take advantage of it and your bottom line shouldn't be affected that much.” David Walter, Electrician Mentor

10. Thank your customer

When a customer does pay, differentiate yourself from other businesses by thanking them for payment. Developing a rapport with clients will make them more enthusiastic about paying your invoices quicker.

Ravi Davda, of Rockstar Marketing, says, “Every time a client pays an invoice, say thank you. Honestly, this has always worked well for me. Most people/companies never do this, and people like praise. A client will usually remember this, so the next time an invoice comes around, they're more likely to pay on time. Make sure it's genuine, though."


Unfortunately, late unpaid invoices are common occurrences and you will inevitably come across slow playing customers. However, you can reduce the number by following the steps outlined above.

Implement all the right processes in your invoicing and you will benefit from more working capital in your business bank account and less awkward conversations with slow-paying clients.