If you need a rule of thumb guide to good cash flow practice, our 10 quick tips are here to help:
- Start at the beginning
Before you take on a new client, run a background credit check to see how much you can trust them to pay.
- Know the details
When it comes to issuing an invoice, make sure all of the details are accurate, from the name of the client or company, to the amount owed – and make sure you get the deadline date right, too.
- Send the invoice
There’s no good reason to delay sending an invoice – getting paid for work you’ve already done is more important than running up more client bills, so get it done.
- Follow up
Don’t assume every invoice will be successfully received, processed and paid in full and on time. Simply following up with an email or phone call gives you peace of mind that your payment is being handled.
- Remember the deadline
If deadline day is approaching and you haven’t been paid yet, place another call or email to the client to remind them that it’s due – in many cases, they will pay immediately to avoid missing the deadline.
- Send a reminder
As soon as a deadline is missed, you should chase for payment. Don’t leave any breathing room, just send a reminder stressing that payment is required immediately or penalties and interest will be added to the bill.
- Add the fees
If it comes to it, add on the extra costs and make sure the debtor knows that you have done so. At best, they’ll pay you the invoice amount plus fees and interest; even if they only pay the original amount, that’s a good outcome.
- Go to court
If you need to, and if it’s worth it, take non-paying clients to court and get what you are owed. Be pragmatic though, as the time and money involved might mean it’s not worth it just on a point of principle.
- Stop the work
If you’ve had payment problems with a client, don’t work for them again, unless there are good mitigating reasons to do so – keep a list of the firm denials, and don’t be tempted to cave under pressure, unless the client is willing to pay upfront on their next order.
- End at the end
Know when to call it quits – that could mean accepting only a portion of the debt and writing off the rest, but it also means being firm about escalating the action you take when it’s worth going to court, or tracing debtors who have ‘done a runner’ with your money.