By Darren Fell, MD at Crunch.co.uk
Just as a car runs on petrol, a business runs on money. Without consistent cash flow, most companies will fail. Every business wants to be paid on time and as quickly and trouble-free as possible. What are the best ways to ensure you are paid on time?
If you’re sending invoices with details and terms that are unclear it’s only going to annoy the accounts department. They are not going to spend time trying to clarify, so be clear and avoid frustration. Make sure your invoice contains your company name, contact details, a description of the work carried out, invoice number, the date and bank details for payment. Do add your terms, for example — payment within 10 days or 30 days.
Invoice straight away. If you’re sitting on an invoice it’s not going to get paid. Gain contact details for the person in the accounts department and work on building a rapport. If it’s a smaller company the accounts person may only work a few days a week, find out which days and make a note.
Ask for a deposit of around 20 — 50% for all new customers before the services are delivered. This is a great way to test someone’s ability to pay. If they refuse the pre-payment then it may be a sign that you’re going to have a timewaster on your hands.
4.Give to receive
Some people always pay on-time. It’s good to give something back to these. If you offer a small discount for early payments then the likelihood is people are going to want the discount and you will get paid on time.
5.Finally — don’t give up
Call the accounts department a week before the invoice is due to say the date is coming up. This is a good way of reminding them and it leaves a week for the payment to be sorted out. Be persistent in chasing. If you give up, there’s a little chance payments are going to fall at your feet.
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