How to Collect Late Payments from Customers
Quick Answer
How to Collect Late Payments from Customers
Collect late payments in escalating steps: day 1 reminder, day 7 statement, day 14 formal letter, day 21 letter of demand with interest, day 30 cut off supply and consider the Small Claims Court (up to R20,000) or an attorney. Charge interest and collection costs if your terms allow – and put those terms on every invoice and quote.
The escalation ladder
| Day | Step | Tone |
|---|---|---|
| 1 | Friendly email + statement | Helpful |
| 7 | Phone call to the accounts person | Firm |
| 14 | Formal letter referencing terms | Businesslike |
| 21 | Letter of demand + interest | Serious |
| 30 | Stop credit / pause work; Small Claims or attorney | Final |
Glossary: invoice and quotation. Also read payment terms.
Your legal tools
- Interest: charge mora interest per your terms (or prime-linked) once the account is overdue.
- Small Claims Court: claims up to R20,000, no lawyers needed, quick dates – take your invoices and proof of delivery.
- Attorney’s letter: often enough for stubborn corporate debtors; costs can be claimed if your terms allow.
- Credit bureaus: listing persistent defaulters changes behaviour.
Always check contracts against the Consumer Protection Act framework and the NCA where applicable.
Prevention beats collection
- Credit-check new corporate clients (trade references, CIPC status)
- Deposits and milestone billing on anything above your pain threshold
- Invoice the day you deliver – late invoicing reads as flexible payment
- Stop supplying chronic late payers until accounts clear
Common mistakes to avoid
- Doing more work for a client who already owes you money
- Threatening legal action you never take – it trains debtors to ignore you
- No written terms, so interest and collection costs are unenforceable
- Letting the ‘accounts person’ run you in circles instead of escalating to a decision-maker
A South African example
A contractor is owed R43,000 for 74 days. She sends the day-21 letter of demand with interest calculated, files in Small Claims Court for R20,000 and claims the balance through an attorney – the debtor settles in full the week before the hearing date, plus interest, as the terms promised.
Related questions
- What Payment Terms Should a Small Business Use?
- How to Manage Business Cash Flow
- Professional Invoices in South Africa
- Business Problems & Fixes
Always verify this information with official South African government sources. Rules, fees and thresholds change. Check gov.za Department of Justice before you act.
Frequently Asked Questions
Can I charge interest on late payment?
Yes, if your terms and conditions or the invoice state it – and even without terms, mora interest can be claimed once you demand payment.
Is the Small Claims Court really free of lawyers?
Yes – for claims up to R20,000 you represent yourself, commissioners guide the process, and it is fast.
Should I use a debt collector?
For invoices above Small Claims limits or multiple debtors, a reputable collector or attorney usually recovers more than they cost – if your paper trail is clean.
