You've done the job, the customer is happy, you've sent the invoice, but what should you do if they then suddenly ghost you and you never receive payment? As a small business dealing with other small businesses, thankfully, I find that this doesn't happen too often ...
Most people I work with pay up straight away as they appreciate that cashflow matters to a fellow small business owner and you deserve to be paid for a good job well done. But you will always get one who either honestly can't afford to pay you, or is just a bad payer. How can you reduce the risk being taken for a ride by them and never seeing your money?
Here are my top tips on avoiding the need to chase you debts:
- Be really clear what your charges are and what your expected payment terms are (payment in advance, payment on completion, 30 days credit etc).
- Don't be afraid to ask for money upfront; either a deposit or full payment depending on your industry sector. In my case, for training, it is the industry standard to request payment on booking. When you order online you pay before the goods are shipped with most sellers. If you are at all unsure on your client's ability to pay then request the money before you provide the service.
- Make your invoice clear and accurate, including clear instructions on how and when people should pay. If you are using Sage50cloud or Xero, there are options to link to payment services like SagePay, GoCardless, Stripe and PayPal or clearly display your bank details so direct payments can be made.
- Send invoices out promptly and double-check that they have been received.
- Follow up with statements or reminders if appropriate. Xero can be set up to send automated reminders. If you do your accounts in excel this can be the most time-consuming part. Most accounts packages allow for statements of outstanding funds to be sent quickly and easily.
- Don't be afraid to give your customer a call and have a conversation with them. If they are really struggling to pay you could offer or extend payment terms. A little money regularly is better than no money ever.
- If payment is still delayed and you feel you may need to get serious, send a registered letter called a 'notice of action' before you then seek legal help in chasing the debt. I will do a future post with details about this and suggested wording. This has worked in 99.9% of cases for debts that I have had to chase.-
If you have any tips that have worked for you, feel free to add them as a comment.
If you need help in editing your invoice or statement designs or want to set up the automated payment options in Xero or Sage50cloud then you can arrange a handholding session and we can go through the options together.
If anything I've written here resonates with you, call me on 01604 420057 and let's see how we can help you.