First things first - make sure you're invoicing properly
Read our article on how to raise an invoice
to check your invoices have the information required by law, plus some suggestions on what else you could include to increase your chances of getting paid.
Make your terms and conditions of business
clear, and make sure they're understood before
you provide any goods or services. Your terms and conditions of business should include how late payments are handled.
Do you need to give credit at all?
If you can, structure your business so you get paid in advance. If that's not possible get payment at the same time the goods or services are provided. Only if neither of these options are possible should you deliver something before you've been paid for it. If you do, get your invoices out ASAP and ideally on the same day not the end of the month, especially if it's for a big order.
Check new customers are credit-worthy and be wary of taking large orders from them if you're in any doubt about getting paid
How to get paid quicker
Make sure your invoices are accurate and easy to read
Don't forget to include details of what payment methods you accept, and the payment deadline date
- Give your customers an incentive to pay early, and charge a penalty if they pay late
Don't be reluctant to chase late payers. Unless they have a query, your should expect payment by the due date
Once you're established and have built up a track record, you can speed up the payment of your invoices by using a invoice factoring or invoice discounting service. For a fee (usually percentage of the value) they'll pay your invoice immediately and take over the chasing and collection of your invoices.
Managing cash flow
Watch the credit terms you're giving versus what your supliers are giving you! If you buy goods or raw materials on credit make sure the credit terms you give to your customers is shorter that the credit terms your suppliers give to you. Get your suppliers to agree to your terms and conditions of purchase.
Check invoice payment dates that coincide with public holidays or during the summer months. Adjust 'payment due by' dates if necessary and contact customers to check they'll be able to meet the deadline date. The last thing you need is a large outstanding invoice and the only person who can approve payment is away for 2 weeks!