For many small businesses, securing a contract with a large company is a major milestone. Big clients bring stability, visibility, and consistent work. However, these benefits often come with a hidden downside: late payments.
Despite their resources, large businesses are often among the worst offenders for delayed payments. If this is an ongoing issue, it’s time to take action and protect your cash flow.
Why Do Large Businesses Pay Late?
- Complex Approval Processes
Large organisations often have multiple layers of approval, which can significantly delay payments. - Extended Payment Terms
Many large companies set terms of 60, 90, or even 120 days, straining small businesses financially. - Cash Flow Prioritisation
Larger businesses often prioritise their own finances, paying smaller suppliers last because they assume you’ll tolerate it. - Administrative Errors
Missing documentation or errors in invoices can lead to delays in processing payments.
The Impact on Your Business
- Cash Flow Problems
Late payments from large clients can make it challenging to pay your own expenses, including rent, payroll, and suppliers. - Increased Costs
You might need to rely on loans or credit to cover shortfalls, leading to higher interest and fees. - Operational Strain
Chasing overdue payments is time-consuming and stressful, pulling your focus away from growing your business.
How to Manage Late Payments from Large Businesses
- Negotiate Clear Terms
Set clear payment terms during contract negotiations, and if possible, avoid agreeing to terms longer than 30-45 days. - Invoice Immediately
Send accurate invoices promptly after completing work to avoid unnecessary delays. - Follow Up Consistently
Implement a system to send reminders before payment is due and escalate communication if payments are late. - Establish Relationships with Accounts Teams
Connect directly with the accounts payable department to address issues quickly and efficiently. - Introduce Late Fees
Include late payment penalties in your terms to incentivise timely payments. - Diversify Your Client Base
Relying too heavily on one large client makes you vulnerable. Aim to balance your revenue streams with a mix of small, medium, and large clients. - Seek Professional Advice
If late payments are a recurring problem, a debt recovery expert can help you establish systems and, if necessary, pursue formal recovery actions.
Protect Your Business and Your Cash Flow
Working with large businesses shouldn’t mean tolerating late payments. By being proactive and assertive, you can protect your cash flow, safeguard client relationships, and focus on growing your business.
If you’re struggling to manage late payments from large clients, I’m here to help. With years of experience in debt recovery and cash flow management, I can provide tailored advice and support to help your business thrive. Contact me today for expert advice and actionable solutions to secure your financial future.
Your business deserves to be paid on time—let’s make it happen.