If you have a small to medium sized business you’ll know the impact that late payment of invoices can have on your cash flow. Not only can late payments limit your ability to grow the business at the rate you want, it may even affect your ability to pay your own invoices or staff wages. There are, however, steps you can take to help ensure your invoices get paid on time.
Make your invoices clear and prompt
Ensure that the invoices you send out include all the information a customer needs to make payment. As well as your bank details, invoice number and job description you should make it clear on the invoice what your payment terms are. Payment terms can vary from by return to 60 days so you need to highlight when your payment is required. You have a statutory right to claim interest on late payment – it’s worth reminding late paying customers of this to help speed payment.
Don’t leave it too late
Even if you have a good relationship with a customer who ordinarily pays on time, make sure you chase up late payments immediately. It could be a simple oversight in which case payment can be arranged promptly, or it could indicate a more serious problem with your customers’ finances, and if so it’s best to address this quickly to find a solution that won’t leave you out of pocket.
Outsource credit control
Effective, efficient credit control is a vital component of a successful business. If you don’t have the experience within your business consider outsourcing your credit control. This will help ensure you invoices get paid promptly and free up time in your business to focus on other areas.
Ask for electronic payments
If possible request that all invoices be paid electronically. Cheques can lead to a delay in payment, bank handling charges and even non-payment if the cheque bounces. Electronic transfers can be easily tracked, and you can set up alerts to notify you when a payment has been received, making invoice management more efficient.
Protect yourself from non-payment of invoices by using a credit protection facility. Although no one likes to think of businesses going out of business the reality is this does happen frequently, and if it is one of your customers that gets into financial difficulties you can be left with unpaid invoices.
Consider invoice finance
Invoice finance can provide funds against the value of the invoices owed to you, giving you instant access to funds and improving your cash flow. Factor 21 provides invoice finance services to clients across a range of industries, providing up to 90% of the invoice value on the same day. They can also provide factoring with credit protection and outsource credit control. For more information on our services pleased contact us on 01491 824 993