6 Steps To Getting Paid On Time

As we all know, timely cash flow is one of the most important aspects of a business. Delays to payments can easily create problems for you, and a chain reaction for suppliers, employees and other stakeholders.

According to The CPA, the average small business is owed £8,500, with SMEs in the UK being owed £50bn collectively in late payments! They also spend an hour and a half a day following up late invoices.

Oliver Prill, Tide’s chief executive, said: “It has been known for a while now that late payments are crippling SMEs, with the government having tried a number of times to address the issue. It is however shocking to see exactly how much time SMEs, and particularly the self-employed are wasting by having to chase clients to pay promptly. Cash flow is crucial for SMEs, and just a few late payments can tip them into danger of becoming insolvent.”

With the proper procedures in place, you can increase the likelihood of getting paid on time.

Include your payment terms with all of your invoices
Including your payment terms is essential in getting paid. It ensures everyone knows what to expect and when. Outlining additional terms can help, but even invoices that have longer payment terms between 60 and 120 days can suffer – according to MarketFinance, 23% were paid late in 2019.
Ensure making payments is easy
If you make it easy for others to pay you, you’re more likely to receive your funds on time. Every business has their preferred method of paying, so it can be beneficial to create accounts with the payment service your supplier, client etc are most likely to use.

An increasing number of businesses rely on direct bank transfers, which is only accelerated by services like Wise who can ensure fast and inexpensive international transfers.

It might also be worth holding business accounts with services like Stripe and PayPal to cover credit and debit cards too.

Cheques have generally declined in use for most people, but UK Finance claims they accounted for £272 million in payments in 2019, so it’s worth including your postal address on invoices too in case they opt for this method.
Don’t be scared to require a credit check
If you’re required to do something now, with payment down the line, then carrying out a credit check on the other company can help ensure they’re financially stable and trustworthy. You will then be able to make an informed decision and potentially save thousands later on.
Send payment reminders
Sending the invoice alone doesn’t ensure payment. Make sure to send reminders close to the invoice due date, to ensure the recipient knows it’s coming up.
Encourage them to pay
Offering bonuses or benefits, such as a discount by paying before a certain day or through a certain method, can encourage a company to pay. As they’re often already in receipt of the products and services before they receive their invoice, there is little to incentivise them to pay on time.
Set up a credit control policy
Even after as much encouragement as you can offer, some businesses might still slip through the cracks and miss their payment deadline. Ensuring you have a solid credit control policy for your employees that chase late payments.

Payment reminders should be firm and fair. If they don’t respond, make sure to send reminders and clarify your legal entitlement to charge interest for late invoices.

If you’re unsure where to start, Chaser has outlined 5 steps to creating an effective credit control policy, which includes a free policy template.