Do Late Payers Make Bad Clients?
IN CONVERSATION
In this series of articles, ‘In Conversation’, Miles Aviation Consultancy Managing Director and Owner, Simon Miles, explores the world of aviation consultancy; who consultants are, what they can do for you, the value that they can add, and what to watch out for.
Take it from me, setting up and running your own business is no mean feat. Those who have done it will testify to the huge amount of time, effort, dedication, and patience required to get off the ground and meaningfully grow to gain any level of market share.
As an aviation consultancy, we provide specialist, sometimes niche, services to our clients, services that they may find difficult to source elsewhere. Developing trusted, sometimes dependent, relationships can bring immense value to both parties, fostering productivity and mutual benefit. However, trust and relationships can be easily and quickly eroded.
Like most small businesses, I spend time each month monitoring cash flow and regularly following up on late payments. In 11 years of trading, I’ve only experienced full non-payment once (probably a lower hit rate than most). While unpleasant, I’ve largely adopted the Tony Soprano philosophy that such issues are 'just business.'
Late payment can often be the result of a simple mistake somewhere in the system and is normally fairly easily resolved. But sometimes, it signals bigger issues, and the impact on the supplier-client relationship can be significant.
Since many in corporate life have never run a business, the real effect of non or late payments on their, sometimes critical, supply chain may not always be fully appreciated. For businesses like mine, delayed or non-payment doesn’t just cause frustration; it directly affects cash flow, limits opportunities for growth, and can even threaten survival.
Most late payers are not bad clients, but I’ve learned that consistent delays often signal deeper, sometimes endemic, issues. This article isn’t about 'outing' any specific client but to understand some of the root causes by shining a brighter light on an issue that has blighted small businesses for many years and to offer some practical suggestions on how to avoid it.
Here's five things I've come to understand from late paying clients, and how to manage them:
1. Disorganisation
When discussing this subject with friends and colleagues, I’ve had many conversations about how late payments are sometimes part of a strategic master plan. While this might be true in some cases, in my experience, the reason for ‘chronic offenders’ is obvious: chaotic and disorganised internal processes. It’s more widespread than you may think.
Many clients often don’t even realise they’re behind until you raise the issue. In some cases, I’m sure that if I didn’t follow up, I’d probably never get paid.
2. Financial Instability
Delaying payments sometimes indicates your client may be struggling financially. It’s not always obvious at first, but there are warning signs: partial payments, requests for extended terms, sudden budget cuts or the majority response, radio silence.
While I empathise with their situation, working with financially unstable clients comes with real risks, including the possibility of never getting paid at all. It just may not be worth it.
3. Strategic, Cultural or Structural
Some companies deliberately delay payments as a strategy to manage their own cash flow. They might assume their size or importance gives them the power to dictate or change agreed terms, or they simply don’t prioritise paying on time.
If not managed appropriately, this kind of behaviour can often point to a lack of respect for the partnership and creates unnecessary friction in the relationship.
Sometimes, the delay isn’t personal; it’s about a client’s internal processes. Larger organisations often have rigid payment cycles or layers of bureaucracy that slow things down.
We’ve had experiences where a client agrees to our 30 day terms, only to be told later (normally when enquiring about a late payment) that their terms are 90 days, take it or leave it!
4. Some Businesses Just Don’t Care
Perhaps the most frustrating situations I’ve faced are those where businesses don’t care about paying on time. Research backs this up: 18% of UK businesses admit to using late payments as 'free finance.'
This attitude places unnecessary strain on smaller companies like ours, who often lack the resources to absorb these delays. When recently discussing late payment issues, I was once told that I should consider myself lucky to work for such a prestigious client; not helpful. If a client can’t or won’t take responsibility for paying on time, I start to ask whether the relationship is worth continuing.
5. Impact on Trust and Morale
I’m not a fan of parent-child business relationships. While we are contracted to provide various services for a client, mutual trust and respect are the key ingredients to building a great relationship.
Late payments can erode trust, and over a prolonged period, enthusiasm for a project starts to decline when payments are overdue; more time is wasted chasing invoices rather than delivering value.
I’ve had to pause projects or decline to work with certain clients altogether because the situation became untenable. There have been times when I’ve realised that the client just doesn’t care enough, despite the effort that you may go into explaining what issues you experience because of it. While these decisions are never easy, they’ve taught me that protecting the health of my business must come first.
Insights from Research
Recent UK Government research highlights how widespread late payments are, costing UK SME’s an average of £22k annually, causing cash flow issues, hinders growth, and in some cases lead to business closure;
40% of businesses reported that late payments from their own customers led to delays in settling their invoices.
24% of businesses attribute administrative errors as the cause.
18% acknowledge intentionally delaying payments to manage cash flow.
These figures reflect the challenges I’ve experienced firsthand, particularly as a smaller business.
Tips on How to Handle Late-Paying Clients
Over the years, I’ve developed a few strategies to mitigate and manage late payments:
Set Clear Terms: Be clear on payment terms; 90 days is normally too long for a small business. On bigger projects try to secure advance or staged payments. Finally, ensure that you get formal, written acceptance from the client prior to starting any work.
Purchase orders: not all of our clients issue PO’s. Those that do say it’s ‘as good as cash’, whilst it’s no cast iron guarantee of getting paid, I’ve found that in general, it helps.
Invoice Promptly: I’ve learned to send invoices as soon as possible and follow up quickly on overdue accounts.
Enforce Late Fees: Although it’s not normally something that we do (it’s a choice thing), it may be an effective measure for some.
Reassess the Relationship: I once received a great bit of advice; never be afraid to walk away. If the relationship doesn’t operate on expected norms, the time, stress and the hassle of managing it sometimes just isn’t worth it.
Conclusion: Are Late Payers Bad Clients?
Most late payers are not bad clients, but persistent payment issues are often a red flag that something is wrong. Whether it’s disorganisation, financial instability, or a lack of respect, these delays strain both the relationship and the business, our time and expertise are worth more than constantly chasing overdue invoices.
A good client will fully understand the value of the partnership, respects agreed terms, and communicates openly. It’s up to you to decide.