Knowing your rights, and what you can do when a customer doesn’t pay, is really important – which is why Scruffs Workwear has launched its #PayWhatYouOwe campaign, as Chris Mellor-Dolman explains.
With bills, mortgages and general living expenses to pay, not to mention having enough funds to buy materials and labour, no tradesperson can afford missed payments from customers. Whether you request payments in cash or by bank transfer, there are fewer things more frustrating than sending an invoice or confirmed quote, with your payment deadline in big letters at the top, only for the date (normally after 30 days) to go by with nothing deposited in your bank account and no envelope in your hands. In some cases, it can even damage your business and personal cashflow to the point when you’re using credit cards or personal loans to make ends meet. Not an ideal situation.
Making sure customers know your payment terms before you start work is essential, although there’s still no guarantee they’ll pay on time. Partial payments can be a huge help here, especially for larger jobs that call for a lot more materials. If your customer runs out of money, as sometimes happens, you can at least be sure you have received payment for any work you’ve completed to date.
It helps to be as carefully planned with your finances as possible. Creating a series of reminders, calendar events, or even notes on your computer or smartphone can help you keep track of when you should receive payment for what job – or, you can download software that is designed for this to help you manage your accounting easily. A polite but firm email, asking when payment is likely, also enables you to plan your finances better. If you’re not one for long letters don’t worry, it can be as simple and straightforward as you like.
Unpaid invoices
If an invoice has gone unpaid past its 30-day payment terms, you also have the right to charge statutory interest under the Late Payment of Commercial Debt (Interest) Act 1998. Remember to make sure any additional costs and interest are clearly written in the terms and conditions on your invoice, and that all of your paperwork, such as timesheets and receipts, are signed off and completed properly – the last thing you want is for any of this to backfire on you.
If you still haven’t received your money after the deadline, or an explanation as to why the payment is late, then you have the right to take action. Speaking to a debt collection agency can be a quick option for getting your money, without the hassle of going to court. Under theLate Payment of Commercial Debt (Interest) Act 1998, the agency’s fee can be partly or completely funded by the customer as well.
In more serious cases, you can also make a claim against your customer and take them to a small claims court. For the most part, the claim can be handled online, and receiving a serious letter or email may be enough motivation for the customer to pay you, avoiding costly court proceedings and any damage to their reputation. If worse comes to worst, you can get a court order for them to pay if they accept they owe you money or they fail to respond.
Within all of this, remember that genuine errors do happen, and sometimes invoices can be misplaced or lost. So before taking the serious step of legal action, try to sort out any issues with your customer directly. If you prefer to pick up the phone, remember to follow up any discussion with an email or letter, so it’s in writing, and your customer can’t argue with what was said.
Join the #PayWhatYouOwe campaign
Across the UK, tradespeople are suffering under financial pressures because of late payments. That’s why Scruffs Workwear has created the #PayWhatYouOwe campaign, to support every trade professional, raise awareness of the issue, and provide better support for those who need it. We’ve made it our mission to ensure all trade professionals receive what they are owed, on time and bang on budget.
