A Guide for Dealing With Late Payments | BCT Accountants
A Guide for Dealing With Late Payments
Running a business is an incredible journey. But for all the highs of working with incredible clients, there are inevitably lows to match. Take the frustration of dealing with and chasing up late payments and missed invoices, for example.
Small businesses rely on a good cash flow. But with it being estimated that almost half of British businesses are being paid late, unfortunately this isn't uncommon. This results in precious time which could be spent on building your business, are in fact lost to chasing late payments through what feels like endless calls, emails and letters.
Today, we want to share with you our top tips for handling late payments in your business.
Set Clear Payment Deadlines and Penalties Early
From the absolute get-go, you want to be crystal clear on exactly what your customers can expect from you, especially when it comes to your payment terms. Show them exactly what they will need to pay, when they will need to pay it and what penalties there are for late payments.
Some businesses opt for a 30 day payment deadline but this might not be right for you and your business. Pick a deadline that is going to work for you and your cash flow.
Being clear on your payment deadlines before you start working together is going to really help your confidence when it comes to chasing the payment at a later date.
It goes without saying, but the earlier you send out your invoices, the sooner you can potentially receive your payment. So, send your invoices out promptly to ensure you are paid on time.
Check and double check that the information on your invoice is accurate. If anything is wrong, this will slow down the process as the invoice might be sent back.
Create a system for receiving payments that are as simple and streamlined as possible. You might want to think about offering different ways of payments that suit the customers, or adding in your payment details in all invoice correspondence.
Create a system for receiving payments that are as simple and streamlined as possible. You might want to think about offering different ways of payments that suit the customers or adding in your payment details in all invoice correspondence.
We've all been there where we have simply forgotten to pay an invoice. It happens, we're all human. So sometimes, all a client needs is a friendly reminder to jog their memory. Try sending them an email or giving them a call a few days before their payment is due.
If possible, use tools to automate reminders. This could be automated reminder emails which are sent out to your clients using your invoicing system or a CRM tool. Or this could be simple reminders for you to chase up payment in the best way you see fit.
You could consider using an online accounting tool like Xero. Tools like this can automate invoicing and follow-ups, saving you so much time and effort in the long run.