Small business: how to make sure your invoices are paid on time

Late payments are not only annoying, but also have the potential to do serious damage to your business. Getting your invoices paid on time and having that consistent cashflow is essential, so that you can pay your overheads and keep your business afloat. What’s more, if your clients pay you in a timely manner, you will spend less time and money chasing up overdue invoices.

 

Here are our tips to help you ensure that your invoices are paid on time, every time.

 

Make sure your invoice has the correct information on it 

If your invoice isn’t accurate or doesn’t include everything your customer needs to pay you, the chance of you receiving payment on time is close to zero. The information that should be included on your invoice varies depending on the type of business you run.

However, your invoice should always include:

 

Be specific about when you want to be paid

 If you don’t specify when you want your customer to pay, you’re probably going to end up chasing them. Make sure that your payment due date is clearly written on the invoice. Avoid using phrases like ‘pay upon receipt’. Instead, specify a timeframe to focus the mind, such as ‘please pay within 30 days’ or even ‘payment due 11th July 2019’, for example.

 

Consider spacing out payments for large projects

 If you’re working on a large project for a customer, it may be advisable split up the project/payments into smaller parts and invoice accordingly. If it’s a big project with a new customer, you may also want to ask for an advance in order to mitigate risk of non/late payment.

 

Make it easy to pay

 You no longer have to wait for a cheque in the post to receive your payment. Systems such as PayPal enable you to invoice customers via email. They’ll get a link to your invoice and can then pay it all online. Making the payment process as easy as possible for your customers, means that they should be more likely to take action, sooner.

 

Send out reminders

 As you get closer to the deadline stated on your invoice, it’s a good idea to send a reminder out to your customer that payment is due. This should hopefully result in them taking action and making the payment before the deadline.

 

Make sure you have the right paperwork in place

 When you start working with a new business/customer, as well as clearly setting out your payment terms (and making sure that your customer agrees with them at the start), it’s always advisable to ensure that any necessary paperwork is put in place before work commences. Here at Legal Path, we offer solicitor-drafted legal documents, including a Basic Consultancy Agreement and a Non-Disclosure Agreement, at an affordable price.