No matter what size, how established, or previous success, if you’re not getting paid, you haven’t got a business!
Any book, blog, or seminar aimed at teaching new business owners the fundamental rules of financial management will hammer home the message “cashflow is King”. If you only come away with one ‘mantra’ from learning about how to run a business, let it be that one.
How you invoice and when you invoice is a vital component of cashflow management, it’s what keeps your business running. Without regular income to pay your supplies, yourself and/or your staff, your business will eventually grind to a halt.
Unsurprisingly, cashflow, invoicing and chasing money can cause all sorts of worry and stress, so here are some tips to help you take control, spend less time worrying and more time developing your business.
1. Start as you mean to go on. When you’re starting to build a working relationship with a new or potential client, spell out your charges, what you charge for, and when you expect payment. You don’t have to give them credit, if you want paying for some of the work or materials up-front, or want paying as soon as the work is completed, make that clear. Ask them to sign an agreement to your terms and conditions (or at the very least, confirm they have read, understood and accept your terms and conditions of business by returning a confirmation email). This should come naturally to you as you build up a relationship with your customer.
2. Get to know who pays the bills. If bills are handled by an accounts department, get the name of the person who pays your bills; ideally you want somebody at the top of the chain who has the authority to pay you quickly. Ask them how they like invoices to be set out and their preferred way of receiving them. Do they like them emailed as a PDF/Word document and/or do they want hard copies sent in the post? Electronic methods can be more reliable and also gives you a record of when and to whom the invoices are sent.
3. Check that your bill has been delivered! Don’t assume that just because you’ve clicked ‘send’, that your invoice is being acted on. After you have sent your invoices, check to see that the person has received them (I’d perhaps give them a bit of time to check their mail first)! Depending on your payment terms, give it a couple of days or a set time before they are due. Ask if they have any queries (common information that can stall payment includes missing order numbers, no proof of delivery or not quoting the name of the person who ordered the items). This all depends on the size of the business you are dealing with, some accounting departments only answer the phone between set times or have part-time staff processing their purchase ledger, it’s about getting to know your client and their business.
4. Give people options to pay. If you accept cheques, make sure you’ve told them who to make cheque payable to and where to send it (you may think it’s obvious). I would always give them an option to pay directly to your bank; it saves everyone’s time and you will get paid quicker. It could also save you money too, as most banks don’t charge for BACS but will for cheques.
5. Make sure you have processes in place to manage both invoicing and getting paid. Invoicing is time consuming and too easy to put aside when you’re busy. Make it is part of your routine, block out some time on a regular basis as you would for an appointment. Diarise another block of time on a regular basis to check the progress of payments and to chase payments if required.
We love getting people paid! If, for whatever reason you’re not getting paid or you don’t know where to start, we’re here to help. Call us now on 01482 210876 or firstname.lastname@example.org