Clock and laptop

Sole traders across the country are sharing the same challenge: getting paid by customers on time. So much so, they’re taking a financial hit with one in four (24%) giving up on chasing a customer’s payment altogether and more (30%) ending their working relationship with a customer altogether as they’re fed up of consistent late payments.

With cash flow such a crucial part of running a business and staying afloat, missing out on more than £200 a month due to late payments has a big impact on sole traders’ finances – especially as this amount is the equivalent of a fifth of average monthly income.

To help sole traders tackle their customer payments, we offer the following tips:

  • Refresh your T&Cs
When was the last time you took a look at your T&Cs? It’s worth revisiting these to make sure that you are being clear with the payment terms you expect your customer to meet. You could even include a late payment charge as part of your T&Cs so that customers understand the importance of paying you on time in addition to interest payable at 8% over the Bank of England base rate. Payments that are less than £1,000 can be charged £40 in late fees and payments of £10,000 or less can be charged £70 in line with the Late Payment of Commercial Debts Regulations 2002.
  • Re-trace your records
Keep a track of outstanding payments so that customers – and their payments - can’t slip through the net. This can help keep tabs on which customers need to be reminded about their unsettled account next time they call for your services.
  • Reminders can pay off
Reminding customers about late payments doesn’t have to be time-consuming. Allocate a small chunk of time each week between jobs to remind customers that you’d appreciate their payment to be made at their earliest convenience. By focusing on the largest outstanding bill first, you will be using your time most wisely and help to get your cash flow back on track.
  • Build your network
Building a supportive network around you made up of others who work in your industry can help act as a sounding board for challenges. Some issues will be particular to a certain industry - asking others about ways to tackle late payments, could throw up some helpful solutions that will make your day-to-day workload easier to balance.
  • Re-think the ‘dash for cash’
Cash is almost universally accepted amongst sole traders, but many customers carry less of the folding stuff than they used to, which can result in an inconvenient trip to a cash machine, or promising to pay you next time to avoid the hassle. Let your customers know that they can pay you via mobile payment. For example, all your customer needs to be able to pay you with Paym is their standard bank app and your mobile number– it’s quick, easy and secure to use with no need to share bank account numbers or sort codes. Paym is offered by 17 banks and building societies, covering more than nine out of 10 current accounts.

By Neil Aitken, Communications Manager at Paym