How can I get paid on time?

Unfortunately you won’t every time. It’s a sad reality of our business culture in the UK that some businesses, and perhaps close to the majority, don’t pay their invoices on time.

However much you have your terms and conditions, with your payment terms clearly stated, there will still be businesses that will pay when it suits them for their cashflow purposes or when it is within their terms.

Look to agree and confirm your payment terms and procedures up front. I encourage you to check on your customers payment practice and whether they can meet your terms. If not, then you can decide how much you want to work with them.

Whoever your customer, then they are not an ideal customer if they don’t pay you. Don’t be the bank of your customers and allow your critical cashflow to suffer for the benefit of others, as cash is king!

Keep on top of your credit control and make sure it does not get out of control.

Credit Control is too often considered just for big business, but it is an important aspect of any business. Credit control is anything you do to reduce the wait between supplying a customer and getting paid. 

You have done the work, you deserve to be paid.

If you feel that you can’t personally chase the unpaid invoices, because you don’t want to upset the customer and feel you would risk future work, then get someone else to do it for you.

To avoid chasing payments, you may consider payment technology to help people pay you quickly! Perhaps a direct debit via Go Cardless or a Pay Now button for card payments on your invoices (available via software such as Xero).

A financial ratio to regularly measure is your Debtor Days. The debtor days ratio shows the average number of days your customers are taking to pay you. It is calculated by dividing debtors by average daily sales. Keep it low and in control, ideally matching your payment terms (ie 30 days).

Once you have then raised the invoice, ideally as soon as possible, then here are some steps you can take to get paid:

  • Check the invoice has been received and that it is authorised ready for payment.
  • 7 days before the payment is due, politely remind the customer that payment will be expected on the due date.
  • The day before, issue a statement with the due date as a reminder
  • If not paid on the day, pick up the phone to give a reminder and ask for the payment date (an email is too easy to delete and ignore)
  • Build a rapport with the person responsible for deciding when to raise your payment
  • Get to know the excuses you are served and have a question to respond (eg I just need to get the payment authorised = Great thank you, when do you think that will be?)
  • Keep notes of conversations or promises that you can refer back to.
  • Be persistent in your chasing. People pay people who chase and known to chase!
  • Still not paid, consider issuing formal chase letters every 7 days with the seriousness and threat increasing to a warning of legal action.
  • Thank the customer once paid. The appreciation creates a subconscious feeling for paying you next time!

It may feel like many steps, but you can automate many of these reminders using software such as Xero, Chaser, Fluidly, etc

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