With SMEs owed a staggering £32.4bn in late payments, or an average of £31,901 per firm. Getting paid on time is one of the biggest headaches for companies both small and large. It is frustrating, time-consuming and can totally wreck your cashflow situation.
But there are things you can do to help, read on for our top 5 tips to ensure you get paid on time.
1. Send invoices promptly
Research suggested that the amount of time to payment for invoices raised a week after the work is finished, doubles on average. Ideally, you would want to send your invoice the minute the job is completed while the job details are still fresh in everyone's head and you won't miss your client's payment run.
If you’re frequently sending out invoices late, you should have a rethink of your invoicing procedures – whether that means creating a new spreadsheet or dedicating time to accounting at the end of each day, but spending every working hour on admin won't pay the bills.
Alternatively, you should consider using a job management software that notifies you when a job is complete and allows you to create your invoices at the click of a button.
2. Send invoices electronically
Delivering an invoice by email or through your job management system is quick and easy. It saves time and money and you’ll have a record of when it was sent. What’s more, it prevents delays if the customer wants another copy of the invoice – a problem that accounts for 10% of late payments.
3. Make sure your invoices are accurate
In the survey mentioned earlier, one of the most common reasons for delay is that the payment is awaiting authorisation from a manager. Always make sure that you have the correct invoice amount and PO number, as this will reduce the chance of your client invalidating the invoice.
Again, by using a computerised system for generating your invoices rather than creating them manually, this will prevent typos or human error. Using a mobile application to record job details on site, rather than days later, can help ensure the accuracy and completeness of the details entered into your invoice.
4. Agree payment terms in advance
Many companies will want you to abide by their payment terms, which could be up to 90 days. Knowing this in advance will help you work around cashflow problems.
In a worst case scenario, you can borrow some of the funds from an invoice discounting facility, or offer your client a 5% discount for a quicker payment. Some companies have an in-house policy of always accepting such offers, and it may be worth reducing your profits once in a while to keep cash flowing.
5. Eliminate the potential for disputes
Many businesses that we work with find that disputes over the amount invoiced can frequently cause delays. One common reason for this is when a worker and their client disagree over the amount of time a worker spent on site, or when the worker incurred a lateness penalty.
By having a computerised system that helps to record job details, view job status and automatically raise an invoice when the job is complete, this problem can be easily eliminated without you noticing it.
Okappy Job Management System gets rid of your excessive admin, ensures your jobs are updated as they happen and allows you to raise your invoice at the click of a button. Helping you get your invoice paid faster, ensuring no invoices are forgotten and reducing the risk of dispute.
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