BLOG: Making Sure You Get Paid – Fast!
Cashflow is the life blood of a business. It is great generating lots of work, but it is all for nothing if you are not getting paid quickly. Step one of getting paid quickly is making sure your invoice template gives your customer all the information they will need to pay, ensuring you include any reference they have given you to make it easier for their finance department . From there, follow these three essential steps to take to ensure your business invoices are paid quickly.
STAY ON TOP
Always keep track of who owes what and when money is due. Keeping on top of your own finances is important, so ensure you have bookkeeping and invoice tracking systems in place from the start.
At the very least you need to be organised with the following information:
- Amount due
- Invoice dates
- Date invoice was sent
- Invoices paid
CHASE LATE PAYMENT
Sometimes we let things slide for fear of chasing up payment that is rightfully ours. Remember, it isn’t personal – it’s business! If you have provided a service, you deserve to get paid, so get chasing. If payment is a week late, contact the client to find out why, then repeat this process every 7 days. If payment is a month late, send a repeat invoice along with a reminder that interest is payable on any late settlements.
TIP: It is good practice to ask for staged payments, especially if you are struggling with a particular client. If their cashflow is an issue this can be an option for ensuring you get some money in quickly rather than waiting for a lump sum that never comes.
TAKE LEGAL ACTION
After 3 months of repeating the same process above, you can threaten legal action in the local small claims court. Allow a couple of weeks, call and email the client one last time, if that fails then start legal proceedings. Small businesses are usually able to claim up to 8% over the base rate for late payment, plus a fixed compensation fee and debt-recovery costs. Ideally you don’t want to get to this point, so make sure you have set off on the right foot by chatting to your clients from the get go about what budgets they have, what their payment process is and ensure your systems are robust to keep the cash flowing.
If you are reading this realising that your financial records are not up to scratch then you can book on The Women’s Organisation’s ‘Basic Bookkeeping Course’ for a bit of extra help.