How to handle late paying clients

At some point during your VA career, you’re going to get some late-paying clients – it’s just the way things are. Some clients are fantastic and pay your invoices immediately, some like to cut it fine, and some will really test your patience. Here’s how to deal with the late payers without opening a can of whip-ass on them.

How to deal with late payers

Prevention is key

Some people are anxious or embarrassed to talk about money but, after a few late payers, I can guarantee you won’t be one of them!

Make sure you state in no uncertain terms what the payment terms in your contract are from the get-go and ensure new clients are clear about what they are.

Put your payment terms on invoices and make it easy for clients to pay you.

Good client relationships involving regular communication mean late payments are far less likely to occur in the first place.

Have a late-payment procedure in place

This is how to mitigate late payers – and what to do if you do find yourself with a late-paying client.

1. Ensure you have a clear payment policy and late payment terms within your freelancer contract.
2. Verbally outline your payment terms at the initial client consultation and then email your contract to the client once you agree to start working together. You will find a guide on how to conduct a client consultation as well as a client onboarding checklist (and welcome email) on my Downloads and Training page.
3. Maintain open and regular communication with your clients and ensure you’ve both agreed on the timescale and budget of each new project.
4. Make sure you know how much time clients want you to spend, and ensure they know how much their invoice is going to be.
5. Invoice new clients after two weeks (or less) to reduce any impact should they turn out to be bad payers.
6. Put your payment terms on each invoice along with clear instructions on how to pay you.
7. Email a friendly reminder a day before the client’s invoice is due. Sometimes they just forget.
8. Let the client know their invoice has gone overdue a day after they’ve breached your payment terms.
9. Send your first formal reminder a week after their payment is overdue. Calls are great but you need to keep a paper trail.
10. Send your second formal reminder a week after the first.
11. Then send a final demand stating you’re about to start legal proceedings to recover the payment.
12. Follow through with your threat. (This is where you get on your dragon and burn their house down).

My own experience

Steps 1-6 usually work for me, but I once did some market research for a new client who failed to pay me even after I had chased him a few times.

I’d never worked with him before and, looking back, I did get a ‘dodgy’ vibe off him from the start.

He’d wanted me to do some research on local companies so he could target them in the future to potentially do business with them. After only completing around £100 worth of work, I emailed him an invoice but he failed to pay me or return my calls.

Despite many chases (and rather unprofessionally I admit), I left him a voice message saying I would be contacting each person on that research list to tell them he was untrustworthy and not to do business with him.

The money was in my account within the hour.

I also have a client who used to regularly pay me late but I very much like her and the tasks she gives me. We had a discussion and it turns out her Accountant pays invoices once a month on a specific date – so I just moved my invoice date so my 14-day payment terms fell within her set pay run date.

Sorted.

Your legal rights and claiming late fees

If the amount owed to you is very low and you don’t want the hassle, you could just suck it up and learn from the experience. However, law firms will happily send a standard payment demand letter for a small fee.

If you do decide to go after your money, you can claim statutory interest from small businesses that owe you money starting from the day after the day the invoice should have been paid.

HMRC say:

“The interest you can charge if another business is late paying for goods or a service is ‘statutory interest’ – this is 8% plus the Bank of England (BoE) base rate for business-to-business transactions. You cannot claim statutory interest if there’s a different rate of interest in a contract.”

So you need to make sure your contract states that you charge 8% statutory interest plus the Bank of England base rate.

The freelancer contract I sell includes this clause and you can find out the current BoE base rate here.

Taking legal action

I’ve never actually had to take legal action against a client to recover an outstanding payment but a few Virtual Assistants in my VA Handbookers Facebook group have.

This is what happened to one of the members in October 2022.

“I had this situation recently and this was the process and timescale. On 22nd September I issued a Letter Before Action with Thomas Higgins Solicitor’s online service which cost £30.

The former client did not respond within the required 7 days.

Next step – rather than paying this solicitor to arrange the court process, I went to the HMRC money claims page and made a claim against the debtor, listing the amount and steps taken previously to recover. This cost £80.

The client immediately received an email from HM Tribunals giving them 10 days to respond. They quickly responded saying they would pay because a County Court Judgement (CCJ) against a company/individual affects their credit and mortgages etc.

I received the outstanding amount on the 6th of October with interest.”

Conclusion

You can avoid a lot of this by simply setting out from the beginning what your payment terms are and agreeing with your client how much work you’re doing, at what rate, and over what time period before you start work.

I know that it may feel a bit “scary” to have conversations about money with clients but it’s far scarier to have your income fall through the floor and to take a client to court!

As professional business owners, you and your client work together – you are a team – and good communication is vital.

Managing your clients and their expectations is a large part of being a Virtual Assistant and trading time for money is literally how running a business works.

So try to avoid getting in this situation if you can, but if it does all go belly-up, deal with the late-paying client in a professional manner and don’t lose your cool.

Then go get your money!

Resources

• You can find six late payer letters on my Downloads and Training page. They’re free and they get results. 
• It can be difficult to have awkward conversations like this with a client so I’ve written 15 email templates to help you. From declining a request to lower your rates to telling a client they can’t roll over unused retainer hours,  the templates will get your point across without damaging your relationship.
• This is how you make a claim to take court action in the UK.
• Here is the HMRC page on how much interest you can charge for late payments I mention in the article along with a link to the current Bank of England base rate.
  

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