There are no 2 ways about it; late paying customers add a huge burden on to the day to day running of your business. Sadly, you’re not alone…over half of all invoices issued last year were paid late.
How do you get your customers to pay on time? Here are some helpful tips:
- Make sure your invoices are correct: 25% of all UK invoices are issued incorrectly. Including sending these invoices to the incorrect department/contact. Ensure all information is detailed and include the following; terms, invoice date and number, amount including VAT breakdown, description, payment details, your company name, address and registered number and reference/order number.
- Add your company logo onto your invoices: An invoice with a company logo is paid 3 times quicker than one without.
- Issue your invoice immediately after the work is completed: Many companies fail to do this, resulting in additional delays in securing payment.
- Unclear Payment Terms: Ensure your payment terms are in plain English and transparently clear to avoid any disputes.
- Incentivise Prompt/Early Payment: Consider offering discounts or added value to those customers paying early or promptly.
- Late Payment Fee: Alternatively, consider adding late payment fees to your invoicing terms. This can give a sense of urgency to your customer and the realisation that there will be financial consequences.
- Supply Chain Bullying: Many larger companies will use bullying tactics to delay paying. Some will have their own terms, ignoring your terms, for example they pay suppliers 3 months after date of invoice. For more details, view our FSB Demand Government answers to SME Supply Chain Bullying.
- Waiting For Their Own Customers To Pay: As above, smaller companies run out of cashflow as they are themselves awaiting payment and cannot afford to pay you until they have been paid.
- Follow up unpaid invoices: The key to good cashflow is keeping on top of your credit control and chasing late paying customers.
- Use a flexible Invoice Finance provider: Invoice finance regardless of how late your customers pay, you are paid by your factoring provider within 24hrs. Many providers will advance up to 80% - at Calverton we advance up to 90% - of each issued invoice, with the balance paid once your customer has settled their invoice.
For more information about invoice finance, please call 01908 268888. Alternatively, please enquire via firstname.lastname@example.org.