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.
Direct debit
There are several direct debit services that you could use to get paid on time, such as GoCardless.
Direct debit is the closest thing to a silver bullet for credit control because you get paid on time, every time.
And if a client or prospect is unwilling to sign up for DD then you have a very good indiction that they might no be a client you want to have.
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!
Michael
Related links:
The VAT payment you were worrying about? That got paid last week!
Cashflow and upfront payments – do not think you are richer than you are!
Blue Dot Consulting provides accounting and business advisory services to clients across Central London, West London and South West London, with particular focus on Fulham, Hammersmith, Richmond, Putney, Wandsworth, Kensington and Chelsea. We help local business owners make better financial decisions and plan confidently for the future.
© Blue Dot Consulting Limited, Chartered Accountants, Bedford House, Fulham Green, London, SW6 3JW
