1. Know your customers
You may be dealing with a diverse range of customers, including both companies and individuals. If you are dealing with a company, consider what will happen if the company is unable to pay. To reduce the risk of non-payment, consider obtaining a personal guarantee from the company’s directors, so that if the company cannot pay, the directors are then obliged to pay. We can assist with preparing personal guarantees.
2. Don’t let late payments escalate
Even one single late payment can quickly snowball into thousands of pounds in losses, making it crucial to address payment issues as early as possible. To protect your business, ensure you have a robust management system in place that allows you to monitor incoming payments and record any payment agreements. Implementing a structured debt recovery process is also essential, and whenever possible, aim to hold in-person meetings to discuss financial matters. These conversations can be challenging, but approaching them openly and directly often leads to better outcomes.
3. Terms and conditions
When the need arises to escalate matters over unpaid invoices, your terms and conditions become a vital tool, so it’s essential to ensure they are robust and appropriately incorporated into your contractual relationships. Customers should be made aware of these terms from the outset, and you should be thoroughly familiar with them yourself. Well-drafted terms and conditions can significantly strengthen your position when recovering debts. Consider including clauses such as accelerated payment terms, which require all outstanding invoices to be paid if one is missed; deposit protection, allowing deposits to be applied to unpaid invoices; and interest charges to safeguard your financial position. You may also want to include provisions for recovering late payment or legal fees, and ensure that English law and jurisdiction apply to any disputes. Above all, be fair and reasonable; courts do not look favourably on unfair or punitive clauses, so your terms should reflect a balanced and professional approach.
4. Recording information
A key strategy to keep in mind when managing financial communications is the importance of recording information. Clear documentation benefits all parties involved, including you, your solicitors, and the fee payer, by providing a reliable reference point for correspondence and reducing the likelihood of disputes. If you’ve had a phone call with a fee payer, it’s good practice to take a detailed attendance note and share it with them promptly. This allows them to clarify or dispute any points discussed, helping to maintain transparency and avoid misunderstandings.
5. Don’t underestimate payment plans
While payment plans may delay the receipt of the full amount owed, they are often a far better alternative than receiving no payment at all. In situations where a customer is unable to pay in a lump sum, it’s essential to act quickly and move them onto a suitable payment plan. Open and honest conversations can be the most effective way to reach a resolution. Still, it’s essential to ensure that any new agreement does not override your existing terms and conditions. Maintaining clarity and consistency in your approach helps protect your business while supporting customers through financial difficulties.
6. Know when enough is enough
Chasing payments can be both time-consuming and costly, making it essential to manage the process efficiently. Regular and ongoing communication with the customer is key to staying on top of payment issues and preventing misunderstandings. Crucially, businesses should avoid continuing to supply goods or services when payment for previously delivered items remains outstanding. Taking a firm but fair approach helps maintain financial stability and reinforces the importance of timely payments.
7. Keep one eye on the wider picture
Every payment recovery scenario is unique, but it’s important not to lose sight of the bigger picture: recovering the money owed to your company. To prepare for potential escalation, liaise with your solicitors early on to understand what information they may need to assist you effectively. Keeping a detailed and accurate log of all communications and correspondence will not only support your case but also streamline the process should legal action become necessary.
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The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at September 2025.