Making sure you get paid promptly every time, without fail, is about more than just issuing invoices promptly (although that can help).
There are several ways to increase your chance of receiving payment in full and on time - and here are some of the main points to consider.
Even before you invoice for work done, you should make sure you understand the payment terms by which you and your customer are bound.
If neither of you has notified the other of any specific terms and conditions, you are theoretically subject to the standard legislation, which means payment should be forthcoming within 30 days, and allows you to charge statutory interest, penalty fees and debt recovery costs on late payments.
In practice, it is rare for statutory interest to actually be paid by a debtor - if you threaten them with it, they often simply pay the original amount owing in full - but it can still be a useful point of leverage to encourage a debtor to settle an invoice that has gone overdue.
Either way, you need to agree terms before you undertake the work - simply putting them on the bottom of your invoice is unacceptable, as the contract has effectively already been made well before you reach that point.
Put full and clear contact details on your invoice, so there is no excuse for the customer not raising any disputes promptly - and make sure you regularly check the email account or postal address you have given them.
Make sure, too, that your contact details for the customer are up to date, so they cannot claim that your invoice never arrived.
It can be worth making the total amount owing significantly bigger and bolder than any subtotals; we're not saying anybody would deliberately pay a subtotal amount in an attempt to avoid paying the rest, but with lots of invoices to process, it can be fairly easy to make a genuine mistake in that area.
How are you able to accept payment? The possibilities are extensive, ranging from electronic funds transfer to cheques, credit and debit card payments, PayPal and other 'e-wallet' sites, and even bundles of cash or exchange of goods or services to the appropriate value.
Make the available methods clear, and ensure at least one is acceptable to the client - if they are overseas, you may need to accept a PayPal payment in a foreign currency, so check that it converts to the right amount at the current exchange rate.
For international bank transfers, an IBAN (International Bank Account Number) will be needed to route the funds correctly, so make sure you put this on any international invoices, while domestic invoices should include your name as it appears on your bank account, your sort code and your account number.
Most importantly, if a payment goes overdue, you must be prepared to chase it. Getting paid promptly means taking prompt action yourself.
Hand in hand with this is, as mentioned up top, the need to invoice as soon as possible upon completion of the work, or at a milestone or month-end during ongoing projects.
You will appear more professional and proactive about payments, encouraging the customer to take you seriously.
When an invoice goes overdue, immediately contact the customer with a final reminder, giving them a deadline by which they must pay in full - perhaps 7 or 14 days, or even as short as 24-72 hours if you are feeling less generous.
If they still do not pay, add penalty fees and interest as permitted by your prearranged terms and conditions, and enlist a collections agent to pursue them - the threat of punitive additional costs and possible court action should be enough to make them sit up and listen.
In short, payment for goods and services is a fundamental part of the business process, so you should give it the respect it deserves - and not just see it as an annoying piece of admin.
Be clear on payment terms in advance, invoice in the appropriate manner, and chase overdue invoices effectively, and you maximise your chance of being paid in full.
- Professional payment terms help to 'lock down' any grey areas and avoid future quibbles.
- Prompt invoicing shows you are on top of your credit control processes.
- Proactive recovery actions ensure clients take you seriously.
If you have a client that seem unwilling or unable to pay your invoice contact Safe Collections today for a free, no obligation review.
Over 150 Years Of Industry Experience
Our modest but highly skilled team has a combined total of over 150 years of experience in commercial credit management and B2B debt collection. From independent IT contractors to major film and TV publishers, Safe Collections has the knowledge and experience you need to get paid quickly and cost effectively.
Image ""Pay Day! Pay Day!"" from flickr user JD Hancock is licensed under CC BY 2.0