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7 Tips For Getting Paid On Time

We keep banging the same drum over here at Cashsolv but from the enquiries that we keep receiving it is obvious that cashflow is absolutely vital to a business's survival. Not appreciating the importance of healthily cashflow in extreme cases can lead to liquidation or administration. The easiest way to try and combat cashflow gaps is one of the most basic parts of running a business, collecting the money that you are due.

Late payments drive reliance on overdrafts

Tips to get paid on timeAbout a quarter of businesses admit that late payment has forced them to rely on bank overdrafts and a similar number said that late payment has resulted in them having to pay their own suppliers late.

How business owners should combat late payments

I have listed below some of the actions that a business owner can try to take to combat the late payment culture currently existing in the UK.

  1. Don’t forget - you have delivered your part of the deal. You are therefore entitled to be paid on time. You may have worked through the night to complete that order or paid overtime to ensure it was completed on time.
  2. Set out your terms and expectations at the outset. Always ensure that your customer is fully aware of your terms of payment. You should highlight this at the outset of any dealings and make sure it is clear on every invoice.

    If you intend to penalise for late payment by adding interest, make this clear at the start too and include it on your invoice.  You are entitled to charge ‘statutory interest’ for late payment which is currently 8% plus the Bank of England base rate for business to business transactions.
  3. Check your customers out. There are a number of low cost online services that will allow you to run credit checks on new customers which could help prevent problems later on. They can also be used to check out current customers who are showing signs of slow payment. If you react quickly it may allow you to get at the front of a long queue.
  4. Chase your debts immediately. You should immediately let customers know that their account is overdue. Send a statement or reminder after a few days and make sure that it is clear to the recipient that it requires there attention. Have visible signs on the reminder such as “Overdue” stamped in big red letters or “account on stop” stickers. It lets their account office know that they need to do something about it.
  5. Try to avoid accepting cheques. This should help prevent the age old excuse of “the cheques in the post”. It is also not great for cashflow…..two days of postage plus a few more days for it to clear. Try to get customers to pay using electronic transfer or direct debit.
  6. Use the phone. If you have just sent out a large invoice then it would be a good idea to call the customer to ensure the invoice has been received and give the customer an opportunity to raise any concerns.

    If payment is overdue, immediately pick up the phone to remind the customer. Try not to use email as a format to chase payment, they are easily ignored and do not carry the same gravitas than a phone call.

    If you have to deal with an accounts department make sure you have a point of contact and make it your job to know that persons name. You can be sure that they will spot your company when they have a list of overdue bills and they are deciding which one can be paid first.

    Be persistent and make regular phone calls. Be that person that they want to pay first to stop you calling each month.
  7. Stop wasting time and money chasing debts. If you have a customer who never seems to be able to pay on time consider not doing business with that customer.  You are wasting resources and production on customers that don’t appreciate it. If you got rid of customers like these and spent time replacing them with quality customers who pay as agreed your business and cashflow would be in a better shape.
Stewart Goldsmith By Google+ |
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