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Tips to ensure your invoices are paid on time.
Getting invoices paid on time is always crucial for your business, but never more so than now!
Having regular incoming payments helps with your cash flow but managing debtors and following up unpaid invoices takes time and resources, so getting paid on time will save you both time and money!
However, the most significant impact is on your well-being. Fewer worries and sleepless nights can only be good!
So, what are our tips:
Our first tip is to outsource this important task to experts, like our team at Accountability-Plus. It’s not easy to phone your clients and ask for money. It is a job which can be done much more effectively by someone with a little distance.
Here’s what we do for our clients:
First things, first!
At the start of your contract, agree your payment terms. Make them part of your agreement. Keep them short but realistic. Do you need to be paid by the end of each month? If the answer to that is in 30 days, should you set your payment terms as ‘30 days’? Ideally, not! Let’s be realistic and set our payment terms at 14 days. It is then far more likely that you will be paid within 30 days. This delay is because some clients will overrun the terms you set, so you are more likely to get paid within a sensible timespan by setting them slightly shorter.
It is becoming more regular now for some businesses to charge a 50% upfront fee or offer a payment schedule. This upfront payment is something you should consider if you work on a project-by-project basis.
Secondly, get your invoices out on time and correct! If your contract runs monthly, make sure your invoices are out to your clients at the end of the month, or at the very most, the first week of the next month. If they are correct, simple to understand and contain all the necessary information, it will help enormously. Make sure they contain any PO numbers, your business payment details, and any details required for each customer. It sometimes helps customers if you take more than one form of payment, so if you accept PayPal, for instance, make sure you include the details on your invoice.
Sending them to the person who pays the bill shortens the process too. If that is not possible, sending them directly to your contact but copying in the person that authorises the invoice will help. Why not add a ‘read’ receipt to them as well? It’s handy if you do need to start chasing an invoice.
What do I do if payment is not made?
Again, being timely and on the case helps here. If you have an overdue invoice, make sure you follow up immediately by sending an email reminder and making a phone call. It is a horrible job, but if you do choose to do it, make sure you call often and however hard, remain polite and professional.
If overdue payments become an issue, you can revise your business terms and add interest on overdue fees to your contract. It is a statutory entitlement and adding further charges may discourage stubborn clients from paying you late.
You can also charge a business a fixed sum for the cost of recovering a late commercial payment on top of claiming interest.
Understand your customers
All profitable business is based on good relationships. As a supplier, why not find out how best to work with your customers. Find out if they have a regular payment run and if needed, change your invoicing days, or tweak your payment terms to take advantage of it. If they are struggling, why not suggest a payment schedule that they feel they can stick to?
Legal steps are the steps none of us wants to have to take. However, there are legal options you can use if you are not getting any joy in clearing outstanding invoices.
You can look at the Money Claim online section of the Gov.UK website. This section of the site will help you take through the next stages.