Invoicing tips - what do to when clients don't pay

It’s Not Fun, But It’s Vital: Chasing Unpaid Invoices

Let’s be honest, following up overdue invoices is uncomfortable. But it’s also essential to your business survival. If you've done the work, you deserve to be paid. And chasing up unpaid invoices isn’t asking for a favour, it’s enforcing a commitment.

When Should You Chase an Overdue Invoice?

As soon as the due date passes, it's time to follow up. Don’t wait. The older the debt, the harder it becomes to collect. Prioritise the oldest debts first and make it a habit to monitor your accounts receivable regularly.

How to Chase Late Payments (Effectively)

Here are some proven methods to recover your money without damaging client relationships:

1. Send a Friendly Email Reminder

Keep it polite but firm. Mention:

• The invoice number

• The due date

• The current overdue status

Attach a copy of the invoice to make it easy for them.

2. Issue a Statement of Account

Useful for clients with multiple overdue invoices, a statement summarises all amounts due between two dates. While less common these days, it can still prompt action.

3. Make the Call

It might feel awkward—but it works. A polite phone call creates urgency. Remind them of the overdue invoice and let them respond. Always take notes and confirm any promises in writing.

4. Apply a Late Fee (If Agreed in Advance)

If your terms of engagement or service agreement includes a clause for late payment fees, remind the client of this when following up. Always disclose penalty policies before commencing work.

Automate the Awkward: Use Invoicing Software

Save time and reduce stress by using a platform like Xero, which:

• Tracks invoices

• Matches payments automatically

• Sends pre-written reminders on due dates

This means you only step in when the system fails to prompt action.

What if They Still Don’t Pay?

If you’ve done everything right and the client still refuses to pay, take stronger action:

1. Propose a Payment Plan

If the client is struggling financially, offer to split the payment over a few instalments. It’s better to get paid gradually than not at all.

2. Stop All Work Until Paid

It’s a tough call, especially if the client has been valuable. But sometimes, cutting ties is the only way to stop further losses.

3. Use a Debt Collector

If you're out of options, professional debt collectors can help—but expect them to take a cut (often around 25%).

4. Send a Legal Warning Letter

Have a lawyer draft a formal letter stating the overdue amount, any interest payable, and the intent to initiate legal proceedings if payment is not made within a set timeframe.

Write It Off

If the debt is small or unrecoverable, you may decide to write it off. This isn’t ideal, but:

• It accurately reflects your income

• You can claim back tax on income you never received

Need Help With Invoicing or Cash Flow?

At Dolman Bateman, we help businesses tighten their credit control and recover debts efficiently. If you’re struggling with unpaid invoices or need advice on improving your payment terms, get in touch with our expert accounting team today.

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Disclaimer:

The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.