What to do when a client keeps paying late.
Late payment is the most common cash-flow problem for South African small businesses. Here’s how to get a slow payer back on track without losing the client, and when to stop waiting.
By Kyle Zorger, founder of ARS Financial · Updated · 6 min read
In short
- Find out why they’re late: a query, the wrong contact, cash-flow trouble or simple habit. Each needs a different fix.
- Follow a fixed reminder schedule, from a friendly note before the due date to a letter of demand at around 30 days overdue.
- Tighten the terms for repeat late payers: shorter terms, deposits, or no new work until the account is up to date.
- You can charge interest on late payment if the customer agreed to it, or at the prescribed rate once they’re in default.
- Government departments must pay suppliers within 30 days of receiving an invoice.
- If an invoice is 30 to 60 days overdue and promises keep slipping, hand it over.
First, find out why
- A query nobody resolved: a disputed line item, a missing order number or a delivery issue.
- The invoice went to the wrong person, or is stuck in an approval queue.
- Their payment run happens once a month, and your invoice keeps missing it.
- Genuine cash-flow trouble at their business.
- Habit: they pay whichever suppliers chase hardest first.
A short phone call usually tells you which it is. Fix the first three and the problem often disappears. The last two need firmer handling.
A reminder schedule that works
- 01
A few days before the due date
A friendly heads-up with the invoice attached and the due date in the email’s subject line.
- 02
On the due date
A short reminder that payment is due today, with your banking details.
- 03
About 7 days overdue
Phone the person who approves payments and agree a specific payment date. Confirm it by email.
- 04
About 14 days overdue
A firmer written reminder. Pause new orders or work on account until it’s paid.
- 05
About 30 days overdue
Send a formal letter of demand with a final deadline.
- 06
30 to 60 days overdue
If the deadline passes, hand the debt over to a recovery firm or an attorney.
The point is consistency: customers learn quickly which suppliers follow up on time and which don’t.
Tighten your terms for slow payers
- Shorten the payment terms, for example from 30 days to 7 days, or ask for payment on delivery.
- Take a deposit before starting larger jobs, and invoice in stages on long projects.
- Set a credit limit, and stop supplying on credit once it’s reached.
- Put a clear late-payment clause in your terms: interest on overdue amounts and the right to stop work.
- Get your terms accepted in writing before the work starts. A signed credit application or accepted quote is ideal.
Be careful with early-payment discounts and late-payment fees for individuals or small businesses: quoting two prices, or charging a fee for paying late, can bring the National Credit Act into play.
Charging interest on late payments
If the customer agreed to your terms and they allow interest on overdue amounts, you can generally charge it at the agreed rate. If no rate was agreed, you can generally claim interest at the rate prescribed under the Prescribed Rate of Interest Act once the customer is in default. Our guide on interest on overdue invoices covers the details, including the in duplum rule.
When the client is a government department or municipality
There’s no general law that forces private businesses to pay within a set time; your agreed terms are what count. The public sector is different: unless the contract says otherwise, Treasury Regulations under the Public Finance Management Act require national and provincial departments to pay suppliers within 30 days of receiving an invoice, and the Municipal Finance Management Act sets a similar 30-day rule for municipalities.
If a department or municipality is late, escalate in writing to its accounting officer or finance department, and keep copies of every invoice and acknowledgement of receipt.
When to stop waiting
- Payment dates keep being promised and missed.
- They’ve stopped answering calls or emails.
- The amount is growing because you kept supplying them.
- The invoice is 30 to 60 days overdue and your letter of demand has been ignored.
At that point, handing the account over usually costs less than continuing to chase it yourself. With ARS Financial there’s nothing to pay upfront, and you only pay a commission on what we recover.
Frequently asked questions
Not for private businesses in general: the payment terms you agreed with the customer are what count. Government departments must pay within 30 days of receiving an invoice under Treasury Regulations, and municipalities have a similar 30-day rule.
Only if the customer agreed to it beforehand, for example in your signed terms and conditions. Be careful with individuals and small businesses, where late-payment fees can bring the National Credit Act into play.
Generally yes, if your agreement allows it or the work is supplied order by order. Check your contract first, especially on longer projects, so you don’t end up in breach yourself.
Once an invoice is 30 to 60 days overdue and your reminders, calls and letter of demand haven’t worked, it’s time to hand it over.
Hand us the invoice. We’ll take it from here.
No recovery, no fee, and a live view of every step in your client portal. Based in Cape Town, working nationwide.