As most businesses will agree, getting customers to pay an invoice on time can be challenging. Failure to pay an invoice can occur for a number of reasons from simply not having the funds right through to incorrect paperwork and it’s knowing which route to take with your clients and knowing your customers to recover any monies.
We’ve all experienced the unnecessary stress that non-payment of invoices can cause as it requires more workload when chasing the client. Not to mention the impact it has on your cash flow.
The best way to avoid non-payment of invoices is to know your customers. If you know and trust someone then you’ll know that you’re going to get your money on time. If you have a new customer, check them out. Who are they? Have they got any bad reviews on payments? Try to perform a pre-sales credit check to determine the stability of their accounts. If you’re a member of the local Chamber of Commerce, this facility can sometimes be included in your membership!
On your contract and quotations be sure to clearly communicate your terms of trading and the fact that payments must be made within these terms. For instance make sure your customers know that payments must be made within 30 days. If they don’t make the payment within the required time make sure they’re aware of the actions you’ll take and if you want to recover the costs of chasing late payments, it might be an idea to charge late payment fees.
Personally, I/we wouldn’t just assume they’re not going to pay. The invoice may have been lost or misplaced so we’d/I’d always send a duplicate invoice with a polite letter requesting payment as it’s now overdue. If you’re a little uncertain about doing this because you don’t want to sour your relationship with your client then you can outsource this to a virtual assistant who will happily make those calls for you impartially. Your client doesn’t need to know they’re not employed by you, they’ll act as though you are and for smaller businesses, it can be a welcome relief to distance yourself from the good relationship you have built to have somebody else making those uncomfortable calls but getting the results that you need.
Try to contact the client not just by letter but by phone or social media to remind them of the payments and remember the Government have a department specifically set up to help small businesses with late and unfair payment issues who can provide advice on how to take action if a payment is overdue. The Small Business Commissioner’s office is dedicated to stopping unfair payment practices, particularly from large organisations and they promise to take action to tackle the worst examples of supply chain bullying. It’s good to know, isn’t it?
If the client still doesn’t pay, then your only options really are either a debt recovery agent or the small claims court but taking heed of the points above should eliminate that.
Hope you found this useful. If you want to learn more about what we do here as Aspire then get in touch and let’s arrange a no obligation conversation.
With Aspire you get five credit safe reports included in your monthly package so we can remove some of the stress for you 😊