Please pay me, so I can pay her, and she can pay him, then he can pay you.

Please pay me, so I can pay her, and she can pay him, then he can pay you.

“I’ll pay you tomorrow”

“I can’t access my online banking at the moment”

“I never received the invoice” 

“I’m waiting on a big invoice getting paid. Once, that’s settled, I’ll pay you”

Anybody who has been in business for any length of time is likely to have heard at least one of those excuses/reasons for a customer not paying. It’s estimated 84% of small businesses suffer from late payments and often it’s the larger corporate clients who are the culprits.

The problem with late payers:

Cash flow

It goes without saying that late payers can put extreme pressure on the cash flow of a business. Profit’s nice, but unless it’s cash in the bank it’s not going to butter any parsnips come wages day. And it’s not just the staff that will need paid: you landlord, your suppliers and even the VAT man could all be queueing up with their hand out.


If you’re looking to raise finance for your business, one of the key points any lender or financier will look at is the cash flow. Profitability is all very well but if the cash isn’t there to make your loan payments, you’re going to have problems convincing them to get on board.


If you’re planning to grow your business, this needs cash. In addition to the problems with finance raising mentioned above, if your cash is in your client’s bank account rather than yours, its going to be very difficult to finance any sustained growth.

You should always aim to have enough cash in the bank to pay for six months’ overheads while in growth mode. 

We’ve seen many businesses have to postpone or even scrap growth plans as there isn’t enough cash in the business to fund them.  This demonstrates the key link between profitability and cash flow.

Time and effort

Generally, it consumes time and resources that could be better spent. Frustratingly, the time and energy that goes into chasing late payments could be spent on so much more, such as services that will benefit your clients.

Take action to overcome cash flow anxiety

It’s crystal clear therefore that cash flow, and getting your invoices paid on time, is vital to the success of your business. Here’s our top five tips to help ensure all payments are made when it suits YOU, not your customer:

  • Be clear about your terms from the start (and stick to them)

It’s important that your customers know what your terms are. Ensure that payment terms are clear and unambiguous on order forms, contracts, invoices etc. If the customer has signed a document which states the terms, then there can be no discrepancies or excuses later in the process.

  • Make it easy for your customers to pay you 

Offer as many payment methods as possible. If this article had been written even five years ago, the options would be: cash, cheque, bank transfer, credit cards etc. but now in a business to business environment, cash and cheque payments are all but obsolete.  

You should, at a minimum, accept bank transfer, card payments and/or direct debit. If you’re emailing your invoices our (you definitely should be), then make sure that in the email or on the invoice, there is a link to the various payment methods.  

  • Switch up your invoicing and payment systems 

Evaluate your current systems and make whatever adjustments are needed. Key factors in this:

  • Ensure you prepare your invoice accurately and send it to the correct person
  • Invoice as soon as the terms allow
  • Make sure all payment methods are advised (see 2 above)
  • Set up an automated reminder system to chase the email as soon as it becomes past due

Most accounting systems can be set up to do this automatically if you set the reminders properly.

  • Ask for partial or total payment in advance 

In the consumer world, people are becoming more and more used to paying for an item in advance but it’s taking it’s time to filter through to the B2B world. But, there’s no shame in asking for upfront payment. If you’re embarrassed to ask, then you need to reconsider your career. Remember, big businesses were once small, established businesses were once start-ups. They all appreciate the pain of early stage cash flow and might be quite happy to help you out a little. But be prepared for a little quid-pro-quo. Upfront payment might merit a discount or an improved delivery schedule.

  • Be firm, but fair

Remember that your customer or client could well be in the same boat as you, and their cash flow, not yours, will be a priority for them. It is important therefore that you are consistent with them and insist on payment within your terms, otherwise they may well decide to delay payment. If a client has the choice of paying either one supplier or the another, then you want to make sure you’re the guy who gets paid: be  persistent and keep on until you get paid – remember you’re not being unfair to expect payment for work done, or goods supplied, within the terms agreed in advance. 

Bonus tip: If you have the margins, and if you can afford it, offer discounts for early settlement. But you need to make it worthwhile. 5% is about the minimum that’s likely to make any odds. Before offering a settlement discount make sure you know the impact of the discount on your profitability. 

If chasing payments is a problem in your business, speak to an Acumenica adviser about how we can help introduce systems into your accounting function to minimise the impact on the business as a whole. Email This email address is being protected from spambots. You need JavaScript enabled to view it. to call us on 03330 166559