Could Late Payments Destroy Your Consultancy in 2025?

Getting Paid in 2025: A Guide to Protecting Your Income as a Health and Safety Consultant

As businesses brace for a potentially challenging 2025, cash flow management becomes more critical than ever. With economic uncertainty on the horizon, the risk of delayed payments and financial instability looms larger for consultants. This blog dives into actionable strategies to ensure you get paid on time, escalate when necessary, and maintain strong client relationships while safeguarding your safety business from financial pitfalls.

Start with Your Contract: A Solid Foundation

Before you offer any safety consultancy services, ensure your contract or terms and conditions are clear, comprehensive, and enforceable. While it doesn’t need to be overly complicated, your agreement should:

• Reflect the services you provide.
• Include precise timelines for deliverables and payment.
• Specify payment terms, late payment penalties, and dispute resolution processes.
• Highlight the importance of method statements in planning and executing safety protocols.

Ask yourself this: If your client refused to pay and you had to take legal action, would your contract hold up in court? If the answer is no, it’s time to revisit and strengthen your terms. Affordable legal advice or even AI tools can help refine your documents without breaking the bank.

Best Practice Tips to Prevent Late Payments

1. Request Payment Upfront: Many clients are more willing to pay upfront than you might expect. For smaller jobs, like safety training courses or fire extinguisher servicing, request full payment before starting work. For larger projects, like providing a complete safety management system, ask for a 50% deposit to secure the booking. Using tools like Square or iZettle allows you to accept payments quickly and easily, even on-site or via mobile apps. Additionally, consultants can request payment upfront through live online payment systems for added convenience and flexibility.
2. Setup Direct Debits: For ongoing projects, such as providing competent person services, it may be easier to setup a direct debit with automated payments.
3. Use Portable Card Readers: For services involving physical goods, such as fire extinguisher replacements, having a card reader ready for immediate payment can streamline the process. Clients are often happy to pay on the spot without any objection.
4. Submit Invoices Promptly: Delays in sending invoices signal to clients that payment isn’t urgent. Submit invoices as soon as the work is complete to maintain a professional image and ensure faster processing.
5. Utilise Automatic Reminders: Tools like Xero or QuickBooks allow you to automate payment reminders. These notifications nudge clients without requiring direct follow-up, saving you time and awkward conversations.
6. Avoid Concentration Risk: Relying heavily on a single client for the majority of your income is risky. If they delay payment or go out of business, your cash flow takes a significant hit which can be a huge issue if you have to pay employees or you have subcontracted a portion of the work to other health and safety consultants. Diversify your client base so no single client accounts for more than 20-30% of your income. Conduct credit checks using affordable tools or free resources like Companies House to assess potential red flags.

   

How to Handle Delayed Payments and Reduce Risk

When clients miss payment deadlines, balancing professionalism with firmness is crucial. Here’s how to manage the situation step by step:

1. Initial Follow-Up: Start with a polite email or phone call to confirm the invoice was received and ask when payment can be expected. Often, a friendly reminder is all that’s needed.
2. Send a Formal Letter: If reminders are ignored, escalate to a more formal letter outlining the overdue amount, additional charges (e.g., interest), and potential legal action. Be clear but respectful to preserve the client relationship where possible.
3. Claim Statutory Interest and Compensation: Under the Late Payment of Commercial Debts (Interest) Act, you can charge 8% above the Bank of England base rate for overdue invoices, along with fixed compensation fees (£40-£100 depending on the invoice size). Notify the client of this charge to encourage swift payment.
4. Engage Legal Insurance: Having legal insurance can save you time, stress, and money. Research providers carefully to ensure they’ll be effective if you need to escalate a payment dispute.

Debt Collectors: A Last Resort

If all other options fail, hiring a debt collection agency might be necessary. Here’s how they work:

1. Engage a Debt Collection Agency: Provide them with:

• Copies of unpaid invoices.
• Any contracts or agreements with the client.
• Records of payment reminders and communication.
• Engaging professional safety services can help manage financial risks and ensure compliance.

2. Debt Recovery Process: The agency contacts the client directly through phone calls, emails, and letters to recover the debt. Their persistence and professional approach often prompt clients to pay.
3. Legal Action if Necessary: If the client still refuses to pay, the agency may recommend escalating the matter to court. In this case, they can assist with filing the claim and pursuing legal enforcement if needed.

Costs:

• Flat Fee: A fixed charge.
• Percentage Commission: typically 10-25% of the recovered amount.
• No Win, No Fee: Higher commission but only charged if successful.

  

Exploring Invoice Financing to Reduce Risk

For businesses with long payment terms or cash flow challenges, invoice financing can provide reliable and efficient financial solutions. Here’s how it works:

1. Submit Your Invoice: You send an unpaid invoice to the financing provider.
2. Receive Advance Payment: The provider pays you 70-90% of the invoice value upfront, ensuring immediate cash flow.
3. Client Payment: Once the client pays the invoice, the provider forwards the remaining balance to you after deducting fees.
4. If the Client Doesn’t Pay:

• Recourse Financing: You’re responsible for repaying the advance if the client defaults.
• Non-Recourse Financing: The provider absorbs the risk of non-payment but charges higher fees.

Costs:

• Service Fee: around 1-3% of the invoice value.
• Discount Rate: Interest of 1-5% above the Bank of England base rate, charged until the client pays.

While invoice financing can ease short-term cash flow pressures, the fees can be substantial, so weigh the costs carefully.

Final Thoughts

Getting paid on time is vital for an consultancy’s success, especially the safety industry. Make sure you take some practical steps to protect your company in uncertain economic times. By tightening your contracts, diversifying your client base, leveraging tools like automatic reminders, and exploring options like statutory interest, debt collection, or invoice financing, you can protect your cash flow and focus on growing your business.

Have tips or experiences to share? Let us know in the comments or reach out via My Safety Consultant’s LinkedIn or email. Let’s navigate 2025 with confidence—together!