Getting paid promptly is a good thing – most of us are fairly confident about that – but you might think as long as the money comes into your account eventually, it all amounts to the same thing.
The truth is much different though, and in actual fact ensuring you are paid promptly every time could be a disproportionately wise decision to make in terms of running your business effectively.
For example, consider three scenarios: an invoice paid the same day it is issued, an invoice paid at the 30-day deadline, and an invoice paid at 60 days, 30 days overdue.
The first is simple – you are owed the money, and it arrives immediately into your account. Wonderful, you can move on to the next customer.
In the second scenario, you’re paid on time, so you haven’t lost out, right? Well, that depends – for example, you might have missed out on 30 days of interest from having those funds sitting in your business account.
You may have had to delay purchasing stock or equipment due to a lack of funds, and many of us have been in the position of ‘just waiting’ for an invoice to be paid on its due date, usually with fingers crossed that the funds actually show up on that date.
And if you have a lot of invoices on an ongoing basis, 30 days is long enough for the stack of paperwork to really mount up, making it much harder to spot when one deadline is missed.
Finally, in the third scenario, you are still paid, but not until 30 days after the original deadline – so what have you lost?
Again, you may have had to postpone purchases in the absence of expected funds; you may have dipped into an overdraft, suffered a bounced cheque, or had to resort to personal savings or a credit card to tie you over.
Meanwhile, you probably spent at least some time chasing the debtor and reminding them to pay, and this is time you could have spent more profitably elsewhere.
Ultimately, there’s an extra admin burden, an extra time burden, an extra financial burden and a whole lot of stress associated with an overdue invoice.
CPA’s credit control services can help you to be more proactive about issuing invoices on time and making sure they are paid promptly too – you can even outsource the whole process to us if you want.
We know how hard it can be to keep on top of everything in a small business, especially if you’re a sole trader or are expanding for the first time.
Our services are here to help you get every penny of the money you are owed, and get it into your account as promptly as possible, giving you and your growing business the best possible platform on which to build. To talk to a member of our team call 0808 256 5130 or click here to fill out our contact form.