Last week, my business made £1,180 from a customer without doing any work. All it took was for this particular customer to pay their invoices late. This one customer was over 80 days late in their payment, and the amount was large.

A few months ago I talked about the different emails I use for chasing late payers. Judging by the interest this post received, it seems that late payers are becoming more and more of a problem for freelancers and small business owners.

As regular readers will know, I am an advocate of using cloud based accounting software – and my choice for this type of service is FreeAgent.

As I received so much interest in the late payment email templates, and a few questions on how I set up automatic chasing of late payers, I thought I would today share how I set up Freeagent to do the escalation for me.

Late payers can kill your company. There is nothing worse than having completed work, and having to nag, chase and threaten a client in order for them to pay their bills. Whilst they sit back withholding your money, your own bank balance reduces and panic can set in.

There is lots of advice available on the web about what to do about late payers for Freelancers, Contractors and Small Business. I myself have talked before about various ways of dealing with late payers. But a lot of this advice is not being honest about the real world, and how business really happens. So let’s all put aside the make believe situations, and talk about what you can REALLY do about late payers.

One of the most boring and annoying tasks a freelancer or small business owner has to do is to chase customers for overdue payments. Whilst there are no hard and fast rules, I believe that there are 5 stages to chasing payment.Of course before you chase, you need to know that payment is due. Tracking invoice due dates and payments is the key to good credit control, so first make sure your accounts system is up to the job to make tracking and chasing as easy as possible.So my own personal five stages of chasing are as follows:

One of the many hats that freelancers and small business owners have to wear is that of the accounts manager – dealing with the invoicing, paying bills, analysing profit and loss, and of course chasing payments from customers.

Unless you are very lucky, there will be times when customers will take advantage of you as a freelancer or small business owner by stretching payment terms beyond what you specify or has been agreed, into something that suites them. This is true now more than ever with the credit crunch and people using cash flow to prop up companies.