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GM BUSINESS connect

October/November 2017

debt recovery

7 tips to get your invoices paid It is a sad fact of business life that not all your invoices will be paid on time, or at all. Large companies will have credit control departments to chase payments and maybe even an in-house legal department. Medium companies will at least have an accountant or bookkeeper that manages the credit control processes. However, many small companies cannot afford the cost of a member of staff dedicated to chasing payments from customers. This short guide offers a few tips to get your invoices paid. 1. Stay close to your customers where possible, talk about their business and business plans with them. This is often referred to as KYC (Know Your Customer). Confirm if they are a sole trader, partnership or a limited company. Verify their identity by requiring them to complete a credit account opening form, obtain a credit report wherever possible. Don’t just become an invoice each week or month. Try and form relationships and a regular dialogue which will help keep you familiar to your customer. If the time comes for them to have to

choose between your invoice and another invoice from a supplier who never speaks to them other than to demand x and y you will win that battle every time.

2. Be clear on your payment terms on the invoice but also at the time of completing the work or a transaction. If your terms are not clear or are ambiguous, then it’s just another option for a debtor to delay payment. It also gives you a point of reference when they are surprised as to why you are chasing payment “so early on.” Always e-mail your invoices to your customers so they cannot claim they never received them. If you have to post invoices follow them up a few days later with a call or an e-mail requesting confirmation the invoice has been received. 3. When working with bigger companies you should also check their payment terms when entering into any agreement with them. There is no point in chasing after 30 days if they pay all invoices after 60 days. Make sure both sides have clear expectations of when the invoice will be processed. It saves wasted phone calls and letters.

4. It is vital to ensure you use the correct firm tone in your terms and conditions.

You may never need (or want) to use this legislation but simply by putting the following on your invoice it shows you are aware of the law and take invoice payment seriously: “We will exercise our statutory right to claim interest (at 8% over the Bank of England base rate) and compensation for debt recovery costs under the Late Payment of Commercial Debts (Interest) Act if we are not paid according to our agreed credit terms.” 5. Invoice payment can often come down to difficult choices by the debtor. If they are faced with 10 invoices and 5 are getting paid it is more likely that the invoices perceived to be chased the hardest or with the sternest terms and conditions will get paid. Human nature says you will pay the company who seems the most fierce over the nice guy who always accepts the delayed payment excuse however lame or farfetched they may be. Make sure your invoices and terminology give you even a

chance of making it into the 50% that the debtor will pay that day. It may be a valuable investment to enlist a professional company to ensure your processes are as watertight as they can be.

6. If you don’t use an accounting software package, make sure you keep a log of times and dates of calls, e-mails and letters sent to clients that can be so useful if further action is required. 7. Keep your cool. Non-payment of money you are owed can be very frustrating but threats and aggression often delay payment further and can have serious legal implications. If you feel you have met all of the above to the best of your ability and you are still having difficulty getting paid then it is time to get professional help.

Paul Daine Premium Collections www.premiumcollections.co.uk

GM Business Connect Oct.Nov 2017  

October/November Edition of Greater Manchester's fastest growing B2B Magazine