Set up standard payment terms and make sure your staff knows the policy cannot be changed without proper authorisation.

Have a strategy in place to deal with requests from customers who suddenly demand longer payment terms.

If you want to charge your late-paying customers interest, make sure that is spelled out on all your contracts and invoices:

“we reserve our right to claim interest at …% from the due date of each invoice until payment and to recover any costs of debt recovery if we are not paid according to the agreed credit terms.”

Even if you choose not to claim interest, the threat may be a good deterrent for late payment. You should note that attempting to enforce a “recovery expenses” clause in some states is illegal.

Watch out for any wording in documents from your customer that might change the payment terms. If you accept their order and fail to notice the change to terms, their terms will take precedence.

If your credit application, terms, and conditions allow for it, raise a new invoice for interest and late payment charges if your customer has not paid. This will get your customer’s attention. If you refer the matter to a debt collector or solicitor, tell them you have done this to ensure that the proper amount is claimed.

Interest terms and late payment fees which were not agreed to by both parties prior to the transaction will not be enforceable, and only court interest and scale legal costs may be able to be recovered. If your customer admits they will take longer to pay you in the future, you must decide how important their orders are to your business.