Whether you are running a small business, are a freelancer or self employed often getting paid promptly by your clients and customers can be a major problem. If you are dealing with a small business they may be having cash flow issues or in larger businesses there can be a lot of red tape to get through before your invoice hits the accounts department.
Here are some top tips that you can implement to help you get paid quicker:
1 Don’t be afraid to chase for money you are owed
Don’t be afraid to pick up the phone to your customers and start chasing them as soon as your invoice goes overdue or even slightly before it is due just to politely check it is on their system. The longer you take to remind them, the longer you will wait for the cash to arrive in your bank account. If you don’t have time you could consider enlisting the help of a bookkeeper to stay on top of these debts on a regular basis.
2 Invoice promptly
Financial admin can suffer if you are busy and invoicing may one of the things that is slow to get done. Make sure invoices are sent to your customers in a timely manner and if you are too busy, consider getting a bookkeeper or accountant to help you stay on top of your invoicing process. You’d be surprised how many businesses forget to raise invoices or take weeks to bill a customer! Review your invoicing process and make an efficient process is being followed.
3. Accept credit card payments
Depending on your business, you could encourage your customers to pay your invoices by credit card. There are so many methods of securely accepting credit card payments using virtual terminals – paypal, izettle or stripe are great options for which you don’t need a merchant account and integrate neatly with accounting softwares like Xero and Quickbooks, so you can add a link on your invoice to take them to a payment screen and see when the invoice has been paid in your accounting system.
4. Ask for up front payments or milestone payments
Depending on who your customers are you could ask for a payment upfront or milestone payments which help reflect the costs you incur in delivering your job or project. It helps the cash coming in and keeps debts at a minimum.
5.Review your invoicing system
Over the last couple of years automated invoicing from accounting softwares such as Quickbooks or Xero have become so easy to use and can speed up your invoicing. Excel spreadsheets can become a thing of the past for many small businesses, simply raise your invoice, let the system calculate the VAT update your ledgers and automatically email the invoice to your customer.
6. Clarify Your Payment Terms
Your invoice should state your payment terms such as within 14 days or 30 days. If it doesn’t update your invoice now. Then, when you are negotiating with a customer make sure you communicate to them clearly and in a friendly way your payment terms. That way when invoices start to delay you can continue your conversation from a clear starting point.
7. Withhold Work
This really is a last resort and can erode your client relationship so be prepared that if you take this stance you may loose your client entirely. That being said if the value of the work is sufficient for you to withstand loosing them then you may consider stopping or withholding work. Unfortunately there are clients out there who take a poor view towards paying suppliers, so act cautiously if someone is always making excuses or delaying your payment.
Do you have any tips to get paid quicker to share? Tweet us @acc_tax_forum to tell us more or get some advice on our forum if you are having a specific problem with a customer.