Client Refusing To Pay Invoice UK

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Client Refusing To Pay Invoice UK

Are you in a situation where a client is refusing to pay an invoice in the UK? For many businesses, big and small, the occurrence of clients that leave invoices unpaid is sadly common.

According to hrnews.co.uk, UK SMEs are currently owed around £61 billion in late invoice payments. Some may have forgotten a payment date and therefore their invoices payments are late.

Some clients may ask you to provide a service to them with no real intention to pay in the first place. Invoices can easily go unpaid if these slip through the cracks of a credit control system.

The sad reality is that the more common this problem becomes, the bigger the toll on one’s cash flow.

After all, cash flow is the lifeblood of any business and if damaged can threaten its longevity. No matter the sector, it is a fact that all businesses want to be paid on time.

Keeping a steady track of your finances is one of the most difficult tasks a business owner must carry out. When situations such as the non-payment of invoices occur, this can become extremely difficult to resolve.

Our experts have put together a guide to assist in the recovery of unpaid invoices and also how to prevent these.

No one business should have to deal with clients that withhold the payment of their invoices.

Preventing The Non Payment of Invoice UK

Much like with any problem, there are ways in which preventative measures can be implemented to reduce the chances of unpaid invoices happening in the first place.

Clients that refuse to pay invoices will know they are going to do this before you issue it.

You must be one step ahead and put procedures in place to ensure they cannot go through with this.

Spotting the warning signs of clients that is not going to pay can be extremely tough.

Payment Terms

One such way of doing this is to execute Payment Terms before any goods or services are provided.

Payment terms are discussed at the beginning of a project and are signed by both parties.

This ties the client into a contract agreement that says they will pay for what has been provided.

The contract states how much is to be paid and on what date the payment should be made.

This is usually 30 days or 60 days after the services have been provided by the business.

Interest On Late Invoice Payments

Your credit control team could use the addition of interest onto any invoices that fall into the ‘late payment’ category.

Adding interest to late payments is a good way of provoking the client to pay you on time.

This is a tactic that is not used that often, but in some scenarios can be extremely effective.

The thought of having to pay more is enough to make any rational person pay in a timely manner.

Dealing With A Client Refusing To Pay Invoice UK

Whilst the above steps may help a large majority of the time, unfortunately, some will still leave invoices unpaid.

Knowing how to chase payment can be challenging, especially if you are not versed in the recovery process.

A small business may not have enough internal resources to conduct the recovery process so will have to use external options.

Legal Action and Advice

Many businesses believe that taking a court claim through the county court is a viable method to ensure payment.

This can end up costing a lot in terms of time and money to formulate a successful outcome.

Solicitors can be expensive, and in some cases charge around £400+ per hour for their services.

Legal actions such as submitting cases to money claim online are also commonly used.

The government will issue a payment notice, explaining it must be paid within 21 days or further action will be taken.

The above is very similar to a statutory demand.

For any limited company having problems with clients that refuse to pay invoices, this may seem like a valid choice.

Threatening legal action is known for getting those who owe money to pay their dues.

This may be a viable solution for tackling clients that refuse to pay invoices, however, there are better options.

Using A Debt Collection Agency

The best way to collect payment for invoices is by using a professional debt collection agency.

There are a plethora of debt collection agencies in England and Wales to choose from.

It is important to know what the good and bad traits are of agencies that carry out debt recovery.

At Best 4 Debt Collection, we provide the UK’s leading comparison service for debt recovery companies.

Although this article is focused on business invoices, we are able to recommend agencies for personal and international debts.

The best agencies are regulated by organisations such as the Financial Conduct Authority (FCA).

Our service will only provide you with the best and most affordable options available.

A low cost but effective debt collection service is recommended if you have clients that refuse to pay invoices.

The leading debt collection and recovery agencies that we recommend include:

• Federal Management (Commercial Debts)
• Frontline Collections (Private Debts)
• Legal & Trade Debt Recovery
• Federal Management International (International Debts)