Get information - Know to know your clients
Having a personable relationship with existing and future clients will pay off in the long run. Being able to contact the person who deals with your payments directly can make both your jobs easier. Try calling them up before a payment is due to check they received it - this shows great customer service, a reminder that if they have not signed off the invoice or seen the invoice its been sent and needs to be dealt with, and it also leaves fewer excuses not to pay such as its not ben received. Keep on top of any clients that regularly go over your payment date terms by making a call the day after you have sent it in. Check the right person has it and its being handled.
If payment is still delayed, find out the reason for this and attempt to resolve any issues they may have had with your product or service promptly.
It’s good to research potential new clients. Check on Companies House about the business. Is the business a sole trader, partnership? Does the type of business wanting to do B2B the right kind of business for you? If the person engaging to do business in a partnership able to authorise work or does it require both signatories? If in doubt, get advice, talk to your Accountant or seek references if you can. Look for recommendations. If there is any doubt in your mind about any new client or customer research. If you are not satisfied with your findings don’t proceed.
Spelling mistakes, formatting errors or missing information can delay payments from your clients. Other common mistakes such as unexplained fees, sending to the wrong person can also make prompt payment less likely.
It's your responsibility to make it as easy as possible for your client to pay your invoice, so make sure it looks professional and includes all the necessary elements for it to meet VAT regulations.
If you can get all the elements of your invoice correct, when you contact your client you are already starting on the right foot for your conversation to flow and there be no obvious reason for a hold up on payment. When you have quoted on work, you need to ensure you have the correct spelling and formats of all the following:
Client title (Mr, Miss, Mrs, Ms, Rev, Dr etc)
Client First Name
Client Surname
Client Address including postcode
Client Contact Tel: Mobile & Landline
Client email address
Be clear on payment terms such as per date of INV, 7 days etc
If it’s B2B, you need to ensure you have all the above PLUS you need the following data confirmed:
Full correct name of person in charge of payments (Accounts Payable):
Email Address of person in charge of payments (Accounts Payable):
DDI of person in charge of payments (Accounts Payable):
You need to obtain payment date runs. They need to confirm that any PO’s required for payments to be made are issued in a timely manner and in conjunction with your payment terms. Make it clear if there is anything that will hold up the payment process their end that you are advised of this ASAP with details of why.
If you are VAT registered, ALWAYS quote and invoice with the total including VAT.
Description on Invoice of works carried out. Concise details of works carried out on all invoices.
If it’s a collection for a delivery to an end customer, as well as the collection contact data you need the persons data that you are delivering to be included on the invoice as well; name, contact tel, email, as these quite often are the people being invoiced and not the point of collection.
Get a signature authorising works to be carried out once your quote has been accepted. Either in person or an electronic ‘yes’.
Include payments details on all your invoices so BACS payment can be made. Ask your clients to always quote your invoice number when making a BACS payment.
When you raise an invoice, and its approved send it straight out. There is no reason not to. You have done your work, get paid for it. If you send it out straight away its more likely to get paid quicker as the work you have done is fresh in your client’s mind.
Personal clients: As soon as the customer invoice is overdue chase it. Don’t ever be worried to chase for money owed to your business. If you are, get someone else in the business to do it if you are able. Or, outsource. It must be done.
B2B: Chase 5 working days after it has been sent. Check that it is on the system, any PO’s required for payment have been applied and the invoice is to be paid as per your T&C’s. Don’t be fobbed off, stand your ground and get a payment date from your contact. If you have a regular late payer, and someone else landed the job get the person to make a call to their contact, there could be leverage for the invoice to be paid. Make it clear if you do business again on your payment terms. Add late payment charges if you need to for late payers.
If there have been no issues with services but your client won’t pay despite chasing, stop supplying the client immediately. If they rely on your product or service to run their own company, then this can be enough leverage to ensure you get paid on time.
Similarly, you have a statutory right to claim interest on late payments at 8% over the Bank of England base rate, so make sure your clients are aware that you will consider taking this action to encourage them to pay promptly. If this is something that you intend to include in your payment terms, add it in.
Ways to help avoid late payment problems
Be clear about your payment terms
Set specific payment terms at the beginning of any contractual agreement. Include these conditions on any invoices you send. If there's nothing in writing, then there's no proof. Having a specific 'payment due by' date will also make it clear to the client that you expect to be paid by.
Keep reiterating the facts
When you're chasing an unpaid bill, you need to make it clear what you want to happen. If the payment is late, you should contact the client with the following:
● The payment terms
● The date you invoiced
● The fact that it is overdue
● Your new deadline for being paid
Be persistent
Your clients may be deliberately making late payments to ease their cash flow, but only if they think they can get away with it. Don't hesitate to chase the payment the day after it's due and keep on top of your client until they pay you.
Never apologise for chasing an overdue invoice. If you have provided a service, there are no problems, and your client is aware of your payment terms but still not paid remember that is no fault of yours.
Manners please!
When you receive a payment after chasing, send a “thank you for your payment”. A simple thank you goes a long way.