Get Paid Faster: A Hong Kong Accounts Receivable Playbook

To get paid faster in Hong Kong, agree credit terms and late-payment interest in writing before work starts, take deposits from new customers, invoice on delivery and send reminders from 7 days before the due date. Track the result with days sales outstanding (DSO). If a debt stays unpaid, the Small Claims Tribunal hears claims of up to HK$75,000 without lawyers, the District Court up to HK$3,000,000, and a company unable to pay a debt of HK$10,000 or more risks a winding-up petition.

Last reviewed: September 2026 · Sources: Judiciary, Official Receiver's Office, HKSAR Government press releases, Legislative Council

Why receivables deserve a playbook

A sale is not income you can spend until the cash arrives. For a Hong Kong SME selling on credit, the gap between invoice and payment is often the biggest single use of working capital, larger than stock or rent. Every day that gap shrinks is cash you do not have to borrow.

The good news is that most late payment is administrative, not malicious. Invoices go to the wrong inbox, lack a purchase order number or sit waiting for a manager's approval. A written process fixes most of that before any legal step is needed.

Step 1: set credit terms before the first invoice

The terms you agree at the start decide how much bargaining power you have later. Put them in the quotation, the engagement letter or the sales contract, and ask the customer to sign or accept them in writing.

1. Payment period. State it in days from the invoice date (for example, 30 days), and print the actual due date on every invoice.
2. Credit limit. Decide the maximum you will have outstanding with this customer at any time, and stop supplying on credit above it.
3. Deposit. For new customers, custom work or large orders, ask for part of the price up front. A proportion such as 30% or 50% is a commercial choice, not a legal norm; the point is that you are never financing the whole job.
4. Milestones. For projects longer than a month, invoice at agreed milestones rather than once at the end.
5. Late-payment interest. Include a clause (see below). Without one, interest on an overdue trade invoice usually arrives only as part of a court judgment.
6. Who pays. Name the customer's legal entity and accounts payable contact. A signature from a subsidiary does not bind the parent.

For new customers, run a basic check before extending credit. A Companies Registry search confirms that the company exists and who its directors are. Trade references and a small first order on shorter terms tell you more about payment habits than any questionnaire.

Step 2: invoice promptly and correctly

An invoice sent a week after delivery starts the clock a week late. Invoice on the day the goods leave or the service is completed, or on the milestone date.

Check every invoice against the customer's requirements before sending: their registered name, their PO number, the correct contact, the due date and your payment instructions. Our guide to invoicing with FPS and PayMe in Hong Kong includes a template with the fields that matter. An FPS ID or QR code on the invoice removes the most common excuse, which is that the payer lacked your bank details.

JetFlow puts your FPS or PayMe QR code on every invoice PDF, shows which invoices are overdue and produces an AR ageing report by customer. See how JetFlow handles receivables.

Step 3: a reminder cadence that customers accept

Consistency matters more than tone. Customers learn quickly which suppliers follow up and which do not, and they pay the ones who follow up first. Set the schedule once and send the reminders from templates, on the same days, every time.

Sample wording

7 days before due: "Dear [name], a quick note that invoice INV-2026-014 for HK$48,000 falls due on 15 October 2026. A copy is attached, with our FPS ID for payment. Please let me know if you need anything to process it."

7 days overdue: "Dear [name], our records show invoice INV-2026-014 for HK$48,000 was due on 15 October 2026 and remains unpaid. Could you confirm when payment will be made? If it has already been sent, please share the payment reference so we can match it."

30 days overdue: "Dear [name], invoice INV-2026-014 for HK$48,000 is now 30 days overdue despite our reminders of 22 and 29 October. Unless we receive payment by 21 November 2026, we will place your account on hold and consider further steps to recover the amount, including interest under clause 7 of our agreement."

Keep every reminder factual and dated. If the matter reaches a tribunal, the trail of emails is your evidence that the customer knew the debt was due.

Step 4: a late-payment interest clause

A contractual interest clause gives the customer a reason to pay you before suppliers who do not have one. Hong Kong courts may refuse to enforce a clause that works as a penalty, so the rate should be a genuine pre-estimate of your loss, such as your cost of borrowing, not a deterrent figure.

A plain version reads: "Any amount not paid by the due date will bear simple interest at [x]% per annum from the due date until the date of payment, both before and after any judgment." Take legal advice on the rate and wording for your contracts.

Worked example: interest on an overdue invoice

Take a HK$50,000 invoice paid 60 days late, under a clause with an illustrative rate of 10% a year:

• Annual interest: HK$50,000 × 10% = HK$5,000
• Daily interest: HK$5,000 ÷ 365 = HK$13.70
• Interest for 60 days: HK$13.70 × 60 = HK$821.92

Where a court gives judgment, it may also award interest, and judgment debts carry interest at a rate set by the Chief Justice and published on the Judiciary's interest rate page.

Step 5: measure it with DSO

Days sales outstanding tells you, on average, how many days it takes to collect a credit sale. The formula is:

DSO = (trade receivables ÷ credit sales for the period) × number of days in the period

Worked example: a trading company's quarter

These figures are illustrative.

• Trade receivables at 30 September: HK$1,200,000
• Credit sales for the quarter: HK$2,700,000
• Days in the period: 90 (a round figure for the quarter)

DSO = (1,200,000 ÷ 2,700,000) × 90 = 0.444 × 90 = 40 days.

If the company's standard terms are 30 days, customers are paying 10 days late on average. Its average credit sales are HK$2,700,000 ÷ 90 = HK$30,000 a day. Cutting DSO from 40 to 32 days would free 8 × HK$30,000 = HK$240,000 of cash without selling anything more.

Track DSO monthly, alongside an AR ageing report that splits receivables into current, 1–30, 31–60, 61–90 and over 90 days overdue. DSO shows the trend; the ageing report shows exactly which customers to call. Both fit naturally into a month-end close checklist.

Step 6: escalate when reminders fail

Most debts are settled by the final reminder. For the rest, escalate in order. Each step costs more than the last, so be sure the customer can pay before you spend money chasing them.

1. Letter of demand. A formal letter setting out the amount, the basis of the claim and a final deadline. A solicitor's letterhead often prompts payment by itself.
2. Mediation or a negotiated plan. An instalment agreement, confirmed in writing, recovers cash faster than most court actions.
3. Small Claims Tribunal. The Judiciary's Small Claims Tribunal guide confirms it hears money claims of up to HK$75,000, including debts and goods sold. Hearings are informal and no legal representation is allowed. Filing fees are HK$20 to HK$120 depending on the amount. You cannot split a larger claim to fit the limit, but you can abandon the excess above HK$75,000.
4. District Court. Since 3 December 2018 the District Court's civil jurisdiction covers claims above HK$75,000 and up to HK$3,000,000, as the Government's announcement of the new limits set out. Legal representation is common at this level.
5. Winding-up petition. The Official Receiver's guide to compulsory winding-up lists a company's inability to pay a debt of HK$10,000 or more as a common ground. It is a serious step, normally taken through a solicitor, and a creditor usually serves a statutory demand first. It is most useful against a solvent company that simply refuses to pay.

The Government told LegCo in May 2025 that the Judiciary had no plan to change the Small Claims Tribunal's HK$75,000 limit. The Tribunal does not hear labour disputes; unpaid wages go through separate employment channels, not the trade-debt route above.

Step 7: insure or finance the receivable

If one customer's default would hurt the business, shift some of the risk.

Credit insurance. The Hong Kong Export Credit Insurance Corporation (HKECIC) insures exporters against a buyer's non-payment and against country risks. Its Small Business Policy is aimed at exporters with annual turnover below HK$50 million, as the Government described in a 2022 LegCo reply on HKECIC support; check current eligibility with HKECIC directly. Commercial insurers offer similar cover for domestic and export sales.

Factoring and invoice financing. A bank or finance house advances cash against your unpaid invoices. With factoring, the financier usually takes over collection; with invoice discounting, you keep collecting and the arrangement may be confidential. Fees and advance rates vary widely, so compare the all-in cost with your DSO savings before signing. Our SME government funding guide covers loan-guarantee options if you need wider working capital.

Common mistakes

• Terms agreed only by phone. Without a written clause, you cannot charge interest and the due date is open to argument.
• Invoicing in batches at month-end. A job finished on the 3rd and invoiced on the 30th waits an extra 27 days.
• Reminders only when someone remembers. Irregular follow-up teaches customers that you will wait.
• Keeping on supplying an overdue account. The credit hold is your strongest lever; use it at 30 days.
• Suing a customer who cannot pay. A judgment against an insolvent company costs fees and recovers nothing. Check first.
• Leaving dead debts on the ledger. Write off debts you will not recover, with the evidence of your recovery efforts, so the accounts reflect reality. How the write-off is treated for profits tax is covered in our deductible expenses checklist.

Frequently asked questions

What is the Small Claims Tribunal limit in Hong Kong?

The Small Claims Tribunal hears money claims of up to HK$75,000. No lawyers may represent either side, and filing fees range from HK$20 to HK$120 depending on the amount claimed. Claims above HK$75,000 go to the District Court, unless you abandon the excess.

Can I charge interest on late payments in Hong Kong?

Yes, if the contract says so. Include a clear clause stating the rate and when interest starts, and set the rate as a genuine estimate of your loss rather than a penalty. Without a clause, interest usually arrives only as part of a court judgment.

How do I calculate DSO?

Divide trade receivables by credit sales for the period, then multiply by the number of days in the period. For example, HK$1,200,000 of receivables against HK$2,700,000 of quarterly credit sales over 90 days gives a DSO of 40 days.

How do I chase an overdue invoice politely?

Send short, factual reminders on a fixed schedule: before the due date, on it, and at 7, 14 and 30 days overdue. State the invoice number, amount and due date, attach the invoice and ask for a payment date. Move to a formal letter of demand only after the final reminder.

When can I petition to wind up a company that owes me money?

The Official Receiver's Office lists inability to pay a debt of HK$10,000 or more as a common ground for a winding-up petition. It is a serious and costly step, normally handled by a solicitor, and suits cases where the debtor is solvent but refuses to pay.

Key takeaways

• Agree payment period, credit limit, deposit and a late-interest clause in writing before work starts.
• Invoice on the day of delivery, with the due date and an FPS ID printed on it.
• Send reminders on a fixed schedule from 7 days before due, and put accounts on hold at 30 days overdue.
• Track DSO monthly: at HK$30,000 of daily credit sales, 8 days less DSO frees HK$240,000.
• Escalate in order: demand letter, negotiation, Small Claims Tribunal (up to HK$75,000), District Court (up to HK$3,000,000), winding-up (debts of HK$10,000 or more).

A receivables process is only as good as the data behind it. JetFlow keeps invoices, credit notes and payments in one ledger, flags what is overdue, shows AR ageing by customer and records bad-debt write-offs when a debt is lost. Start free with JetFlow.

This article is general information, not legal advice. Take advice from a Hong Kong solicitor before issuing a demand, starting proceedings or relying on an interest clause.