News & Articles

the giftware association

Navigating B2B Payment Terms: Strategies for Dealing with Late Payments


Payment Terms in B2B: The Statistics

The statutory payment period for B2B invoices is 30 days.  Yet many buyers do not pay on time.  In 2022, B2B invoices were paid 21 days late on average, resulting in an average total payment cycle of 53 days from the issuance of the invoice to the actual payment, according to Sidetrade data.  Consequently, 42% of all companies suffer from liquidity problems due to late payments. These statistics set the stage for the challenges businesses face in managing payment terms.

Understanding the Statutory Payment Periods

In the UK, two parties are legally required to agree on a payment term by which buyers must settle an invoice. The individual payment deadline must be explicitly noted on the invoice. If no agreement has been made, the standard payment period in the UK is 30 days.

The Risks of Late Payments

Invoices paid too late or not at all can have fatal consequences for companies, especially when high order values are involved, as is often the case in B2B trade. Merchants face a spectrum of risks that encompass potential profit loss, liquidity bottlenecks, and unpredictable cash flow. In a study, 42 percent of B2C and B2B companies reported suffering from liquidity bottlenecks due to delayed payments, and 51 percent of the companies had lost profits as a result.

Your Rights When Trade Customers Do Not Pay

In the UK, when an invoice is not paid on time, merchants can apply interest as a late fee for business-to-business sales. This is called 'Statutory Interest' and is charged at 8% of the invoice total plus the Bank of England base rate. You are allowed to initiate a dunning procedure in case of late payment - however, this is not an obligatory prerequisite for further legal steps. 

Strategies for Dealing with Late Payments

  • Send a Reminder of the Upcoming Due Date: To reduce the likelihood of a late payment, clearly indicate the agreed payment deadline on the invoice and refer to it.

  • Make Personal Contact: Contact your customers personally to find out what is causing the delay. Often, there may not be malicious intent behind late payments.

  • Send Payment Reminders: If the payment deadline has already passed, a payment reminder is an important way to prevent non-payment. You should remain polite and professional.

  • Send a Warning: If even a friendly payment reminder does not bring the desired success, it may be time to send the first warning letter. However, it's important to know that you are not legally obligated to write a reminder if the payment deadline is noted on the invoice.

  • Engage Debt Collection: If you fail to receive payment from customers after repeated requests, it's time to initiate the collection procedure. In both cases, you can recover the costs for debt collection and the lawyer from the customer if you are successful.

Late Payments? Pass on the Risk!

Regrettably, it's impossible to entirely eliminate payment defaults. However, partnering with an external provider can eliminate the risk and the time and effort associated with sending reminders and collecting payments. An external provider enables you to outsource these responsibilities and significantly reduce the workload on your business. Simultaneously, you can transfer the risk of non-payment since you receive payment from the provider promptly upon issuing the invoice.

Discover How Mondu Can Help

Partnering with Mondu allows your B2B webshop to offer popular payment methods while passing on the risk of non-payment. Mondu pays you upfront after goods are shipped and handles payment collection in a professional and friendly manner. This means no stress with reminders, satisfied customers, and a risk-free sale.

Contact us to discover how Mondu can help your B2B webshop thrive while minimizing the impact of late payments.


Go back