Late Payment Shock: Larger firms

In the interview we told you about yesterday, Gosport businessman Peter Darcy told BBC Radio Solent: “It does tend to be the larger firms that are the worst offenders for paying late.” However, he went on to add that this is sometimes because invoices are misplaced or wrongly delivered in large offices, leaving them sittingRead More

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In the interview we told you about yesterday, Gosport businessman Peter Darcy told BBC Radio Solent: “It does tend to be the larger firms that are the worst offenders for paying late.”

However, he went on to add that this is sometimes because invoices are misplaced or wrongly delivered in large offices, leaving them sitting in people’s in-trays unnoticed for long periods of time.

“An invoice comes in and it floats around an office for months before you even get in touch to say, ‘Why has this not been paid?'” he added.

There are several obvious and simple ways to overcome this problem, and they’re all part of an effective credit control regime.

Clear invoicing procedures

Make sure you’re invoicing your client in the most effective way.

That could mean sending an electronic invoice to an email address, or a paper copy to a postal address – whichever is their normal method should maximise your chances of prompt payment.

Check the address you have on file, whether it’s an email address or a postal one, and make sure your invoices are going directly to the appropriate person.

If your invoice is not delivered properly, there’s practically no chance of getting paid, so don’t fall at the first hurdle.

Confirm delivery

Even if you’re confident that your invoice has been sent to the right address, you should follow up by confirming that it has been received.

Do this by email, or make a note in writing of the date on which the client confirmed receipt, and set yourself a deadline for when to follow up with a query as to why it has gone unpaid.

If you don’t do this, you face the prospect of asking for your money 30 or 90 days down the line, only for the client to claim they never received the invoice.

Be proactive about confirming receipt, however, and the next query you make after the payment deadline gives you much more control over insisting that the funds be released promptly.

Follow up

If a company owes you money, you are their creditor, and they are your debtor.

Don’t be afraid to get in touch and ask them to pay you, particularly once their payment is overdue.

You have discretion over whether to extend the payment deadline or not, and you may choose to if you trust the client and believe they will pay you when they say they will.

However, try to keep a fixed deadline in place – don’t simply give your client an open-ended period in which to pay you, or you may find that the funds never appear at all.

Be professional

Although non-payment of invoices can leave you in financial difficulty as a small business owner, your personal circumstances have no direct bearing on your client’s obligation to pay.

Try not to let things become personal – instead, remain calm and professional in any correspondence, and if you need to escalate the matter, look to the courts rather than any attempt at emotional blackmail.

With a proactive approach to credit control from the outset, hopefully far fewer of your invoices will reach the stage of needing court intervention, but when the need arises, don’t be afraid to take appropriate legal action to recover your funds.

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