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Reducing late payments for UK small business

Getting paid on time is key for cash flow and something every business deserves

In this article, we provide some best-practices and tools you can use to help you feel more in control of getting paid on time.

If you're a small business experiencing the stress of late payments, you're not alone. Falling into the cycle of late payments is far too easy. In 2023, a study by THP Chartered Accountants highlighted that 62% of small businesses are struggling through the knock-on effects of not getting paid on time.

Running a business is tough enough without the added pressure of late payments, so let's get straight to what can be done to ease some of that stress.

What do we mean by late payments?

Let's break down exactly what we mean when we talk about ‘late payments’.

UK law considers a payment late if it hasn’t been received within the agreed payment period. If a business-to-business contract doesn't specify payment terms, the UK law typically gives a default period of 30 days to pay up.

Just remember, the clock starts ticking either when the customer gets the invoice, or you deliver the goods or service (if this delivery date is later).

What are some of the invoicing best-practices?


Making your payment terms accessible and easy to understand are parts of building a good relationship with your customer and setting expectations.

  1. Clarity is key: Outline specific due dates, payment methods, and any penalties for overdue balances. Transparency ensures that clients are fully aware of what's expected of them.
  2. Timely invoicing: Deliver invoices quickly to maintain a strong link between the invoice and payment. Automation can speed up this process, ensuring prompt payment from clients.
  3. Consistent follow-up: Use automated reminder systems to gently nudge clients without becoming a burden. Schedule reminders in advance to keep your invoice top of mind.
  4. Flexible payment options: Offer a range of payment options, from credit cards to online transfers, to reduce problems in the payment process. Make these options clear on your invoices.
  5. Invest in relationships: Build trust and prioritise positive client interactions to encourage timely payments. Personal touches, like a quick call or thank-you note, can turn transactions into positive experiences.
  6. Early payment incentives: Encourage prompt payments by offering small discounts for early settlements. Clearly state these terms on your invoice and remind clients of the benefits of paying on time.

What’s the best way to chase late payments?

Chasing late payments might feel a bit awkward but remember it’s all about maintaining the health of your business. When you nudge with professionalism and understanding, you can maintain a good relationship and increase your chances of getting paid quickly.

  • Open conversations: Kick things off with a friendly chat. Reaching out with a personal phone call can sometimes clear up any misunderstandings or errors that have led to the delay.
  • Email reminders: Polite email reminders serve as a soft touch for those who might just need a little memory jog.
  • Payment plan options: We get it, times can be tough. Offering a payment plan can make all the difference for a client feeling the pinch.
  • The power of positivity: Thanking clients in advance for their payment can set the stage for a positive response.
  • Invoice visibility: Keep those outstanding invoices unmissable with our easy-to-use Invoice It dashboard. A quick glance will show you exactly who to nudge.
  • Direct Debit set-up: Where it's an option, encourage clients to set up Direct Debits. It's convenient for them and gives you both peace of mind.

Using app-based tools to reduce late payments

These days, we’re lucky enough to have an app that can help with almost everything. Great news – there is also an app that can help reduce late payments!

App-based tools to make payments easier can be extremely effective. Based on BankiFi data from September 2023, 67% of businesses using one reported being paid within two days*.

Metro Bank's version of this app is Invoice It. It's something that we now offer our business banking customers for free, because of how it makes invoicing and payments simple, quick, and secure for all parties.

Metro Bank’s solution: Invoice It

Metro Bank’s Invoice It is that next-level support for small businesses and sole traders. It comes free with our Business Current Account** and is a secure way to get paid, send invoices quicker, and get a real-time view on outstanding payments.

Don’t just take our word for it. Discover how Invoice It can help you reduce late payments and free up your time (and head space) to focus on other things.

Learn more about Invoice It

*Based on BankiFi data as at September 2023 for 2 similar services provided for UK based Financial Services organisations - more than 67% of invoices were paid within two days.

**You need one of the following Metro Bank Business Current Accounts to be eligible for free access to Invoice It; Business Bank Account, Business Start-Up Account, Business Switcher Account, or a Commercial Current Account.