Imagine going to a posh restaurant, racking up a very large bill and then walking out without paying - instead, you promise to settle up… some time in the future.
How would a restaurant survive if it allowed customers to act like that? How could they handle payment of fixed costs - electricity and gas bills; rent and staffing costs?
It sounds like a recipe for disaster. But it’s the type of challenge faced by thousands of companies throughout the UK who find themselves battling against the scourge of late payment.
It’s estimated that, at any one time, businesses in the UK are owed around £40 billion in overdue and unpaid invoices for various goods and services supplied.
A study by the Asset Based Finance Association found that small businesses are now having to wait an average of 72 days. And the smaller a company, the longer they’re liable to be waiting for a payment.
With cashflow acting as the lifeblood of any business, it’s one of the major causes of failing companies. So what can be done?
Here’s a guide to some ways you can ensure your organisation is getting paid on time:
Speedy Invoicing
If you want to encourage late payment, make sure you ‘set the tone’ for customers by taking an age to send out the invoice. So if you fancy getting paid in time - don’t do that!
Make sure you have a fast and efficient invoicing system. The best way to do that is to use an automated digital system. With MyMobileWorkers, all the information required for an invoice is available within moments of a job being delivered.
A quick invoice reduces any wiggle room for customer excuses and significantly boosts the chances of a swift and immediate payment.
State Your Terms
A common excuse for late payment is that the customer didn’t realise when they were expect to settle the bill. To protect against this you should clearly state your payments terms from the start - what, when and how payments should be made.
By highlighting this from the get-go, it makes chasing payment less ‘toxic’. Instead of unveiling demands or deadlines, you are simply reminding them of what they have already agreed to.
Accurate Information
The trick with invoicing is to try and eliminate any potential reasons a customer could find to delay a payment - including quibbles over what they’re paying for. So make sure that invoices are easy to understand, they’re accurate and contain all the information required to make a payment.
It’s something that a digital workforce management system helps to achieve with accurate data available on everything from the time and place of a delivery to reference numbers for items or services provided.
Don’t Get Mad, Get Paid
The temptation when chasing an unpaid invoice is to get angry and frustrated. It’s understandable but it’s rarely the best approach. When following up a late payment, the message in any communication should be robust but the tone polite, professional and courteous.
By maintaining good communications, you may find that there are genuine reasons for a delayed payment and a speedier resolution can be found by working with the customer rather than threatening them.
