So how do you get invoices paid on time? No one likes talking about money, but everyone like having it. . Even if you have full order books, you need money to pay suppliers. Keeping the cash flowing in is essential for all businesses. So what can you do to avoid late or non-payment?
As with so much else, it’s about clear communications.
Get invoices paid on time
Before you start work
- Be clear about the price at the start. It’s much easier for everyone to know where they stand. Yes, you might lose a few people who don’t like the price. Isn’t that better than working hard for no money?
- Clearly state payment dates and consequences for late payment. In our previous business, we produced yearbooks for students. We expected payment of the first third of the bill when we received the initial files, a third when they signed off the final proof and a third before delivery of the books. We had a form which stated this clearly, and that the job would not progress without payment. If you have difficulties in setting boundaries, email firstname.lastname@example.org.
- Clarify exactly what you will be producing and when. If people think they are getting a Rolls Royce and you deliver a 2CV they aren’t going to pay your bill, even if it is a real bargain.
- Ensure the person placing the order is authorised to do. It’s helpful to get something signed that states clearly the price and the acceptance of this.
Once the job is done
- Check everything is okay on delivery. If not, correct the fault, then send out the bill.
- Make sure the invoice is correct and detailed. Check address, order number, VAT etc. Mistakes will delay payments
- Make it easy to pay. Have bank details and payment terms on invoices. If you use Xero you can have a pay now link to Stripe or PayPal on the
- Accept Credit Cards. Yes, I know you lose money if you take credit cards… Think of the time it saves you chasing payment. Put all your prices up to compensate. Don’t charge extra for cards. Many people have given up carrying cash. At the very least, consider PayPal
- Offer benefits or discounts for advance or early payment. Thank people who pay on time. To ensure your invoices are processed swiftly, make friends with the people in the accounts department. Ask them if there is anything you can do to make their life easier.
- Send polite reminders. Statements are a great way to do this. Some folks find it helpful to ring just before the end of the month. Build up a relationship with the accounts department and make it easy for them to pay you.. First, telephone and ask if they received the invoice? Is there any reason it hasn’t been paid? Have a series of letters getting more firm.
- Keep track of who has paid and when. Follow up–see my next article “Won’t Pay, Can’t Pay”
I’ve done all that, but still no payment
There is a range of options you can pursue. My blog, “Won’t Pay or Can’t Pay” explains these. Before you take action, stop and ask yourself the following questions. It will clarify what course of action is best for you.
- Is there anything I can do to change the situation?
- What chance is there of recovering the money?
- How much time, energy and money can I afford to recover this money?
- How important is the relationship?
If you would like some help figuring this out, give me a call on 07980 920 078 or email email@example.com.