Cash Flow & Late Payment Guide
The invoice leaving your outbox is only half the job. This guide covers the tools and concepts for running a healthy accounts-receivable: calculate the right payment terms, compute late-payment interest under UK/EU/US rules, manage dunning, and decide if factoring is worth it.
Calculators
(3)Glossary
(6)Frequently asked questions
How do I deal with late-paying clients?
Send a polite first reminder the day after due date, a firmer second reminder at 7 days late, and a final notice with late fees at 14 days late. KipBill's late-payment email templates and automatic reminder schedule (1, 3, 7, 14, 30 days) handle this for you.
Are late fees enforceable?
Yes, in most jurisdictions, if they're stated on the invoice or in your terms of service. Common rates are 1.5% per month (18% annual) or the statutory rate. In the EU, the Late Payment Directive sets a default of ECB rate + 8 percentage points for B2B.
What's invoice factoring?
Factoring is selling your unpaid invoices to a third party (a factor) at a discount in exchange for immediate cash. It's a cashflow tool — you get 70-90% upfront, the factor collects from your client, and you receive the rest minus fees.
How do I improve invoice payment time?
Invoice promptly (same day work is delivered), offer one-click online payment via Stripe, enable automatic reminders, offer a 2% early-payment discount (2/10 Net 30), and require partial deposits on large projects. KipBill automates each of these.
What should I do with bad debts?
Issue a credit note to cancel the original invoice, write off the amount in your accounting, and reclaim any VAT you remitted on the unpaid invoice (rules vary by country). Persistent non-payers can be sent to collections or pursued via small-claims court.