To get paid on time is one of the most effective things you can do to keep a successful business going. A full order book and being busy are all very good but they aren’t the answer, I’m afraid. I frequently see a look of bewilderment on client’s faces when they see a good profit figure but there is little in the bank. Without cash, you won’t be able to continue in your business.
It’s always important to get paid on time but even more so at the moment, especially if your income has been impacted by the Pandemic.
When you have selected your shopping in a supermarket, there is no question of you not paying, is there? You want the goods, so you pay. Well, why should it be any different paying small businesses?
But it is! Almost half of all invoices are paid late. Remember, once you’ve completed the work, you deserve to be paid.
Hi. I’m Anna Goodwin, your friendly finance mentor. With over 30 years of experience, I know how important it is to get paid on time.
Late payment will affect your cashflow, as well as your time and energy as you chase debtors. I look at this more fully in my book, Your Business Your Numbers. So how can you avoid being in this position?
There Is No Excuse for Late Payment
Because of digital technology, there is no excuse for a delay in payment. I remember when I first started out as an accountant, we would send letters in the post and not expect to have a reply for a couple of weeks. Nowadays, it’s completely different and we send emails and expect a prompt reply. Invoicing is the same. Invoices can be sent from software such as Xero and, because the invoices will be received immediately, then 30 days are no longer needed as payment terms – a week is plenty! Also, payment is made by BACS, so no delay is needed to be factored in waiting for cheques to clear.
7 Things You Can You Do to Get Paid On Time?
This is the good part of getting paid more quickly – a lot of this is in your hands. You need to plan ahead and be more efficient. Putting systems in place makes all the difference.
- Discuss payment terms before you commence work so all parties are clear and put it in writing.
- Send invoices promptly and digitally. Don’t put this off as the customer won’t even think about paying you until they have the invoice in their hand.
- Don’t be afraid to chase payment. As the due date approaches, if they have not paid, then send a friendly reminder. Follow up again if they don’t pay and the due date has passed. If you don’t hear anything, then ring them. For the majority of people, this is not an enjoyable part of running your business, but to stay in business you need to do it!
- Send the invoice to the person who pays the bill. This might not be the person you have been dealing with. So, when you email the invoice, send it to both the person who has authorised it and the person who processes it.
- Get as many contact numbers as possible. During the Pandemic it wasn’t as easy to chase debts as the offices were closed. Learn from this and make sure you have an alternative number. Also, perhaps you can find them on social media and send them a message? I know I regularly get in touch with clients this way to chase information and frequently I reach them more easily than an email!
- Make sure invoices are accurate and clear. If an invoice has to be queried, then this will delay the process. If you need a purchase order number for an invoice, then make sure this is included on your invoice.
- Include your bank details. Hard to believe but I still come across businesses who don’t have their bank details on their invoices. Put them on there. You need to make it as easy as possible for a client to pay you. Also consider whether they can pay you by credit card or Paypal.
Put a strategy in place to get paid on time and you will soon notice a difference. Value the service or product you’re providing and know that you deserve to be paid promptly. What are you going to do to ensure this happens in your business? Please get in touch if you have put any of these actions in place or have any other suggestions as I love a success story!
Next time will be about Communicating effectively.
Anna Goodwin @2021 All Rights Reserved.