{"id":1138,"date":"2022-09-27T12:55:55","date_gmt":"2022-09-27T11:55:55","guid":{"rendered":"https:\/\/www.duport.co.uk\/blog\/?p=1138"},"modified":"2025-10-24T17:03:10","modified_gmt":"2025-10-24T16:03:10","slug":"how-to-charge-interest-on-late-invoice-payments","status":"publish","type":"post","link":"https:\/\/www.duport.co.uk\/blog\/how-to-charge-interest-on-late-invoice-payments\/","title":{"rendered":"How to charge interest on late invoice payments"},"content":{"rendered":"

One of the trials of any small business is making sure your customers pay for your goods or services. If the normal practice in your type of business is that they pay before they get delivery, that makes life much easier\u2026if they don\u2019t pay, you don\u2019t send the goods!<\/p>\n

But in many types of business it is traditional to invoice after providing the goods or service. Where that\u2019s the case, it can be tricky to \u201cstep out of line\u201d and be the only one asking for payment up front. However, if in your business you will be invoicing afterwards, it\u2019s wise to have clear terms before setting up the contract \u2013 for example \u201cpayment on presentation, within 7 days, 14 days etc\u201d.<\/p>\n

The Federation of Small Businesses has had an ongoing campaign for the last few years about late payment. Research carried out with their members in late 2021 showed that during the pandemic, the rate of late payment increased and this forced many small businesses to go under, as they were paying out for staffing costs, materials, energy etc, but not getting money in.<\/p>\n

A key issue to consider is having a clear system of credit control. How do you know when customers have paid? You can use one of the accounting software packages that can track payments automatically from your bank account, and even send reminder letters to the client when a debt is still unpaid. This is by far the simplest way, but of course you still have to take action. There\u2019s no point in knowing that a client hasn\u2019t paid unless you do something about it!<\/p>\n

A few years ago we discovered a fairly simple way of encouraging prompt payment. When we accepted a French translation assignment we made it clear that payment would be due within 14 days of delivery of the translation. For very small jobs of just a few words we adopted a \u201cminimum fee\u201d which had to be paid up front before delivering the translation. This made life a lot easier, as I no longer had to waste time chasing payments for \u00a330!<\/p>\n

But probably the most useful tactic in dealing with this issue for us has been including this little phrase in writing on all invoices:<\/p>\n

\u201cPayment is due within 14 days. After 28 days, we reserve the right to charge interest of 8.5% in line with the Late Payment of Commercial Debts (Interest) Act\u201d.<\/strong><\/p>\n

Nobody wants to pay extra in these hard times. So if you haven\u2019t been paid to your specified timescale, email the client the invoice again with \u201cReminder\u201d in the subject line. If that doesn\u2019t work, when it gets to the end of your payment deadline, send an email saying something like this:<\/p>\n

\u201cOh dear! It looks like payment of our invoice is now overdue. We wouldn\u2019t want to have to send you, our valued client, a revised invoice with an extra 8.5% added on. Please pay as soon as possible\u201d.<\/em><\/p><\/blockquote>\n

We have found that almost always this results in payment arriving within a day or two. (With one who owed us a lot of money, it didn\u2019t \u2026but that was a whole other story…)<\/p>\n

Here\u2019s another idea. A close family member supplies staff to a much bigger business but (as is often the case with bigger businesses), their payment practices exploited smaller ones – they often took months to pay. So she changed her charging policy, giving them plenty of notice, to a dual charge system. On her invoices she makes it very clear that there was a \u201cprompt payment discount\u201d.<\/strong> This meant that the fees owed were lower if payment was made within 14 days, but the full rate would be charged after that. Staff in the accounts department certainly don\u2019t want to explain to their financial boss why they are having to pay more, so this has worked well.<\/p>\n

The main thing to remember is that if you supply goods or services, you are entitled to be paid. Just be clear up front about you expectations and firm in chasing up payment. Be assertive!<\/p>\n

 <\/p>\n

About the Author<\/strong><\/p>\n

Cheryl Salmon is a director of The French Translation\u00a0Company Ltd<\/a><\/div>\n
She also has a background in education and has written a book on parenting “A Private Education Without the Fees<\/a>“, available from Amazon in paperback or Kindle.<\/div>\n","protected":false},"excerpt":{"rendered":"

One of the trials of any small business is making sure your customers pay for your goods or services. If the normal practice in your type of business is that they pay before they get delivery, that makes life much easier\u2026if they don\u2019t pay, you don\u2019t send the goods! But in many types of business […]<\/p>\n","protected":false},"author":2,"featured_media":1143,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[29,80,85,86],"acf":[],"yoast_head":"\nHow to charge interest on late invoice payments<\/title>\n<meta name=\"description\" content=\"One of the trials of any small business is making sure your customers pay for your goods or services. If the normal practice in your type of business is But probably the most useful tactic in dealing with this issue for us has been including this littlephrase in writing on all invoices:\u201cPayment is due within 14 days. 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