Make Sure You Are Paid On Time

Posted on: February 18th, 2013

Welcome to guest writer, Kay Daniels, of Daniels Accountancy

It is vital that late payments do not disrupt your cash flow and harm your business. Before you start doing business with a new client, remember the following:

1. Invoices are payable immediately

Ensure that your terms of business clearly state that invoices are payable immediately.  As a courtesy, you may wish to accept 30 days credit but that is not documented in your terms of business.  Most businesses assume 30 days as the norm, but if your invoices state that the invoice is payable immediately, there is a good chance that it will be paid earlier than the 30 days.

2. Ensure your Terms of Business have been signed by your client and returned to you

If a client has standard payment terms of 60 or more days, this can be crippling for a small business and cause major cash flow problems.  There is nothing to stop you, as a small supplier, trying to negotiate shorter payment terms with them.  Is there quite a long process within the company for sign off and payment of invoices?  Do you need a PO from them?  What is the process for getting your invoices signed off for payment?

Find out the facts at the beginning of your contract – don’t wait until your invoice is overdue.  A large client may be unwilling to move on their payment terms, but if you have the facts at the outset, then at least you can plan your cash flow.

3. All invoices should show your bank sort code and bank account details

In fact, you may wish to accept payments via BACS only.

4. Issue your invoices on a timely basis and check them for accuracy before you issue them                                      

Are they addressed to the relevant person/department?  Be sure to invoice the client as soon as possible – why wait until the end of the month?

Further Tips

  • If you feel awkward asking for payment, or too close to the client, why not get some distance by using the following?  “I’m sure this is an oversight, but my bookkeeper has pointed out that we have not received payment for our January invoice.  Would you please look into it and let me know the payment status?”  You may to wish to ask another member of your team to email or send a statement, instead of you.
  • Are you able to ask for a deposit up front?  If costs are to be incurred and paid for in the early stages, is there a facility for you to be able to invoice for these straight away?  For a long contract/job, can you invoice in stages?  For an ongoing service, consider asking for payment by monthly standing order.
  • Consider using standing order or direct debit for regular fees.
  • Finally, do not let a non-payment situation escalate.  The more overdue the invoice, the more difficult it becomes to collect the payment.

For further information, contact us by email at – we will be delighted to help!  You can follow Kay on Twitter and sign up to her newsletter here.

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