Getting paid on time – it’s one of the biggest drags on the business community and it hits the smaller business particularly hard.
But there are things you can do, it’s time to hit back.
Remember – your company is NOT a source of alternative finance for your customers!
Contracts and agreements
Firstly, have a standard contract for the work your company does which includes the prices you charge and the terms of payment. Get it signed by both parties.
Sometimes it’s difficult to know the exact price in advance, particularly for some services, but give an estimate, allow for a contingency and make sure there are no surprises.
And if you think you will have to do a lot of work upfront then ask for an upfront payment on account before you start or before you release a phase of the work you are doing.
Sales invoices – right first time, on time
Sales invoices are the key to getting paid on time.
They should be correct, sent on time, contain the terms of payment and contain your full bank account details.
Sending sales invoices by email is sensible because it’s difficult for the recipient to say the invoice has not been received. And it’s a good idea to send the invoice to your main contact and to the accounts department of your client.
Chase for payment
Don’t be shy about chasing for payment. Your accounting software should be able to email statements and reminders to everyone who owes you money (if it doesn’t then you have the wrong software!).
Where debtors don’t respond – get on the phone.
If that doesn’t get you paid then stop working with the customer and consider legal action.
Don’t waste time with slow payers. They are painful to work with and a risk to your bottom line and remember – a sale is a gift until it’s paid for!
Sales | Margins | Profit | Cashflow