As a small business, or indeed a business of any size, you will probably have come across the problem of getting money from an client that just doesn’t want to pay you for the work you have done.

It can be difficult and time consuming to recover a business debt, but before you go down that route have a look at some of the things you can do before debt potentially becomes bad.

  • Did you check the client before starting the work that their credit rating seems ok?
  • Did the client sign that he understood the terms and conditions that you work under?
  • Did the invoice state both the payment terms and the due date? Many people will only show the terms (ie 30 days) but it has been proven that if you put a payment due date on the invoice as well it it more likely to be paid on time.
  • Do you offer a discount for prompt payment? Not everyone does and it works sometimes but it may be worth considering.
  • Did you confirm that the invoice has been received? If not try to make it a policy that you contact the client a few days after sending the invoice, if they say it has arrived you at least know that they can not claim that it must have been lost in the post. If they have not received it send a copy (clearly marked as a copy) by fax or email.
  • When the payment due date is a few days away, have you rung the client as a gentle prompt that they should be writing a cheque to you?
  • If the payment date is past have you contacted the client to ask when payment will be made? Often, in the authors experience a statement such as “I am sure that this has been overlooked and payment will be made now.” brings results as it makes the client feel a little guilty for not paying.

If all of the above fails you have several options depending on the size of the debt and the time that you have available to chase the client.

If the debt is under £5000 in England and Wales you might want to try the small claims court (actually there is not a small claims court but the term is used for the special procedure of handling smaller claims in a county court). This is a simple process and can even be completed online. There is a small fee to pay and if the debt is proved to the courts satisfaction the client has to pay both the debt and the fee.

You may want to pass the debt to a firm of debt collectors, these will either buy the debt off of you or will collect on your behalf and take a commission on any money collected. Either way you should not expect to get the full amount of the debt back even if the collectors are totally successful.