“They Always Pay Eventually.” What Is Late Payment Actually Costing Your Business?

“They always pay eventually.”

I've heard versions of this quite a few times over the years when talking to business owners about overdue invoices. A customer regularly pays late, but because the money always seems to arrive in the end, it doesn't necessarily feel like a problem worth tackling.

If an invoice was due on the 1st and gets paid on the 28th, you have been paid, so it's tempting to move on and think nothing more of it. But if you agreed 30 day payment terms and your customer routinely takes 45, 60 or even 90 days to pay you, they're not really sticking to the terms you agreed.

More importantly, your business is carrying the cost of that delay.

You've already spent money delivering the work

By the time you raise an invoice, there's a good chance you've already incurred costs. You may have paid staff, bought materials, used subcontractors, paid software costs or covered travel. Even in a service business without significant direct costs, you've still invested your time and expertise in delivering the work.

Your own bills don't stop because a customer has decided to pay you three weeks late.

That gap between doing the work and receiving the money has to be funded from somewhere. For a business with plenty of cash in the bank, it might be manageable. For a business with tighter margins or several customers paying late at the same time, it can quickly start putting pressure on cashflow.

This is why I don't particularly like “they always pay eventually” as a reason for accepting late payment. Eventually isn't a payment term.

One late payer might not feel like a problem

A £1,000 invoice arriving two weeks late might not cause a crisis. But if you have ten customers doing the same thing, that's £10,000 that should be sitting in your bank account but isn't.

The problem with habitual late payment is that it can become normal very quickly. If a customer learns that nothing really happens when they miss the due date, there's very little incentive for them to prioritise your invoice over all the other demands on their cash.

That's not necessarily because they're a bad customer. Businesses make decisions about what gets paid and when, particularly when cash is tight. If they know one supplier will consistently follow up and another probably won't notice for a few weeks, it's not difficult to imagine which payment gets dealt with first.

Consistent credit control helps make sure your invoices don't quietly slip to the bottom of that list.

Late payment costs time as well as money

There's another cost that is much harder to see on a bank statement: the amount of time spent getting money in after it should already have been paid.

Research from Aldermore's 2024 SME Growth Index found that businesses affected by late payment were spending around 13 hours of company time chasing each outstanding payment. The same research found SMEs were waiting an additional 46 days on average for late payments to be settled.

Thirteen hours is a lot of time to spend getting paid for work you've already done.

And when you're a small business owner, that time has to come from somewhere. It's time you could have spent looking after clients, finding new business or simply getting through everything else that comes with running a company.

It also rarely happens neatly. Credit control gets fitted around everything else, so you finally get an hour to look at the accounts, realise several invoices are overdue, send a batch of emails and then return to whatever else needed your attention. A couple of weeks later, you discover some still haven't paid and the whole process starts again.

That's why having a consistent process matters so much more than having an occasional big push to clear overdue invoices.

What are your actual payment times?

One of the most useful things you can do is look beyond your agreed payment terms and see how long your customers actually take to pay you.

You might invoice on 30 day terms, but if a significant proportion of your customers routinely pay on day 45 or 60, your business isn't really operating on 30 day terms in practice.

That matters when you're planning your own cashflow, but it can also help you spot patterns. You may have particular customers who always need following up, others who regularly make promises they don't keep, or accounts where invoices repeatedly get held up by the same queries or processes.

Once you can see what's actually happening, you can decide what needs to change rather than simply accepting late payment as part of doing business.

You don't have to choose between getting paid and keeping the customer

I think this is one of the biggest reasons business owners sometimes tolerate habitual late payment. They don't want to damage the relationship.

If it's a good customer who gives you regular work, asking for payment can feel uncomfortable, particularly if you know they'll probably pay eventually anyway.

But good credit control shouldn't damage a good customer relationship. You don't need to become aggressive the day after an invoice falls overdue. You do need to be clear about your payment terms, follow up consistently and deal with any genuine issues that are preventing payment.

In my experience, professional customers don't object to professional credit control. If anything, having a clear process removes some of the awkwardness because chasing payment isn't personal. It's simply how your business operates.

When late payment becomes normal

Not every late invoice is a disaster and I'm not suggesting you need to panic every time somebody pays a few days beyond their terms. What matters is the pattern.

If customers routinely pay late and your business has simply learned to work around it, it's worth asking how much money you're effectively allowing to sit outside your business at any given time and how much time you're spending trying to bring it back in.

Aldermore's research also found that late payment related cashflow issues were causing 38% of the SMEs surveyed difficulty paying essential business costs, while 31% reported delays to key investments and 30% said they were missing growth opportunities.

That's the bigger issue with late payment. It isn't just an irritating bit of admin. Money sitting in somebody else's bank account isn't available to pay your bills, invest in your business or take advantage of an opportunity when it comes along.

You did the work, agreed the terms and raised the invoice. You shouldn't have to build your own cashflow around the assumption that your customers will pay whenever it suits them.

At INcharge, we manage the process from invoice to payment for businesses that are tired of fitting credit control around everything else. That includes consistent follow up, dealing with customer queries, tracking payment promises and keeping on top of what's actually been paid.

Because “they always pay eventually” might sound reassuring, but getting paid when you're supposed to is much better for business.

Find out more about our outsourced credit control services and pricing.