5 ways to get your customers to pay on time

Getting customers to pay on time depends on having clear payment terms, checking customers before extending credit, invoicing promptly, following a consistent collection process and escalating overdue accounts when necessary. A structured approach can reduce late payments and improve cash flow without damaging customer relationships.

1. Agree the terms before you do the work

Set payment terms when the customer accepts your quotation or contract, rather than after an invoice becomes overdue. State the payment deadline, accepted payment methods, your position on late-payment interest and the steps that may follow non-payment.

Our guide to writing watertight terms and conditions explains what businesses should consider, while contract clauses that reduce late payment focuses specifically on payment-related provisions.

2. Know who you are selling to

Before offering credit, assess whether the customer is likely to pay. For limited companies, Companies House can provide useful information including accounts, filing history, company status and registered charges. Other credit information may also help identify potential risks.

Establishing setting credit limits at onboarding can limit exposure, while a company credit check provides additional information before substantial credit is granted.

3. Invoice immediately and make paying simple

Issue invoices promptly after completing the work or supplying the goods. Send them to the correct accounts-payable contact and include all information required by the customer’s payment system, such as purchase-order numbers and bank details.

Providing a payment link for faster settlement can remove unnecessary friction. If invoices are regularly queried, review their accuracy and clarity. Our guide on how to get invoices paid covers common payment obstacles.

4. Chase to a schedule

Do not wait until cash flow becomes tight before following up. Create a consistent timetable based on your agreed payment terms.

The precise timetable should reflect your contractual terms and the circumstances of the account. Six tips for making successful debt collection calls can help with conversations, while aged debtor reporting that drives action helps prioritise overdue accounts. Businesses without internal resources can also consider outsourced credit control.

5. Use your legal position and escalate when appropriate

For qualifying business-to-business debts, statutory interest is generally 8 percentage points above the Bank of England base rate. With Bank Rate at 3.75% in August 2026, that is currently 11.75% a year. Statutory interest cannot normally be claimed where the contract provides a different substantial remedy for late payment.

Businesses may also claim fixed recovery compensation of £40 for debts below £1,000, £70 for debts from £1,000 to £9,999.99 and £100 for debts of £10,000 or more. The GOV.UK guidance explains the rules, while claim statutory interest on late payments provides practical guidance.

If payment promises repeatedly fail or communication stops, consider when to escalate an invoice. Specialist approaches may be required for construction debt collection or international debt recovery.

FAQs

When does a business invoice become legally late?

Where a payment date has been agreed, payment becomes late after that date. If no date has been agreed, statutory rules generally treat payment as late 30 days after the customer receives the invoice or the goods or services are supplied, whichever is later.

Can I charge interest on an overdue business invoice?

For qualifying commercial debts, statutory interest can generally be charged at 8 percentage points above Bank Rate unless the contract provides a different applicable remedy.

When should I use a debt collection agency?

Consider external recovery when normal reminders and formal demands have failed, payment promises are repeatedly broken or the customer stops communicating. A commercial debt collection agency can assess the account and determine the most appropriate recovery approach.