If you're self-employed, how do you deal with late payments?

[Themarchoftime]

I've been self-employed for a long time but I've been lucky enough to work for companies who've paid on time.

This past year has been dire work wise but I ended up working for an old client for the last quarter (not full time, but enough).

Their payment terms are already longer than mine. However, on the day the most recent payment was due, they emailed to say they couldn't pay me on time due to a number of their clients paying them late. The invoice is sizeable.

They are a good sized company.

I've been pestering them for a payment date but they won't commit, just said it will likely not be until the end of this month (5 weeks late). By then, another invoice will be due and another invoice will have gone in. I'm still doing bits of work for them, tying something up, but I rejected offer of new work until this is resolved. Equally, I really like the work and the team on the ground and I don't want to lose what might be a lucrative income stream this year (in a dry industry).

That said, I'm doing it for money!

I want to believe it's a matter of cash flow for them - although I'm shocked they don't have a line of credit for these matters - but when do you start to worry the company is in trouble?

Tricky. I assume you have T&C agreed? You did the right thing rejecting more work from them until they've paid up.

On one occasion we stopped dead mid project until they'd paid up - they couldn't proceed without me.

You can charge the statutory late payment fees - I had to do this back in the day a couple of times. It was very clear I'd do this in my T&C.www.gov.uk/late-commercial-payments-interest-debt-recovery/charging-interest-commercial-debt

I did have one notoriously sloppy payer; I switched to hiking my rates by 5% and offering them a 5% discount for payment before the due date. Astonishingly, it worked.

That's really helpful, thank you.

Not SE now but used to be. You have to remember that it’s NOT an income stream unless / until they pay you.

If they don’t pay you, you have to stop work!

Yes, of course. That's why I've refused any more work.

Your first line says their payment terms are longer than yours .. that’s not up to them, you can set your payment terms.

whenever a company said they couldn’t afford to pay yet, I’d say ok but you must be paying someone, soon, make it us! Always worked

I do typically set payment terms but this company were insistent these were the terms - and honestly, as a contractor, it's sometimes a question of take it or leave it.