How to Get Paid Faster Instead of Chasing Money
Chasing money is not how any business owner wants to spend their time, however chasing late payments can become a continuous, mundane and irritating task that causes a lot of worry. You may not be able to pay your suppliers if your customers are not paying you; you might not be able to pay yourself since you are waiting on other people to pay you; you might be hitting your sales targets, however find yourself in financial trouble when there is no cash in the bank. With a reported £26.3 billion owed to SMEs, businesses are struggling to grow. There are a lot of issues surrounding this, so here are our tips on getting paid on time.
Before going into business with your potential customer, perform a credit check. It is very easy to assess whether this customer meets their financial commitments.
Be up front about when you want to be paid. Make sure this is based on when you need to meet your financial commitments and what is a reasonable payment time regarding your industry. It is always a good (and obvious) idea to let your customer know when this payment time is.
Recurring invoices and email reminders can be automated on software like Xero and QuickBooks, so you will not need to send out your recurring invoices manually – a big time saver.
If you charge a customer a monthly/ weekly, etc. fee and the fee is always the same, you can set the customer up with a direct debit mandate, minimising the risk of late payments.
A late payment fee is an option, which may sound harsh, however depending on what industry you are in, it could encourage your clients to pay on time and they are likely to prioritise your invoices.
Send your invoices sooner, not later. If you send an invoice a week after the job is complete, your customer may pay you with the same sense of urgency, meaning you could be waiting a while. Sending your invoice on the same day as the job is complete is likely to make your customers pay you quicker.
Unfortunately, this problem is rife in the business world and is almost impossible to eliminate, however the tips above are likely to make the situation slightly better.
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Disclaimer – this information is correct at the time of publication and is provided as general information not to be relied upon without a discussion with a suitably qualified professional