Entrepreneurs! Follow these 19 tips and get paid on time

If you’re an entrepreneur, chances are your biggest ongoing problem is cashflow

Nine out of 10 businesses have been paid late, according to a YouGov poll for accounting software firm FreeAgent, and one in eight businesses have been paid more than a year late.

Businesses are not getting the money in when they expected, meaning budgets end up being stretched, sometimes to breaking point.

In fact, cashflow problems are the biggest killer of small businesses in the UK.

Here are 19 tips to help get the money you’re owed, when you’re owed it.

  1. Can you be paid before you carry out the work or provide the service? It sounds obvious but even the most traditional of industries can be shaken up by doing this. It might even make it easier for the customer.

  2. Consider making to order, if it suits your business. You can offer your customers a more bespoke product/service and avoid buying in materials and stock until you know it will be paid for.

  3. Make the payment procedure clear to the customer before you start the work.

  4. Ensure the costs are agreed before you start, or give the customer a clear estimate.

  5. Don’t rely on verbal agreements – get a signature before you start.

  6. Credit check your customers if appropriate.

  7. Invoice immediately after work is completed.

  8. Be polite but firm.

  9. Make sure there is a “due by” date on the invoice and that it’s clear with all the necessary information on.

  10. While 30 days is a standard billing cycle, there’s no reason why you cannot shorten it to 14 days, as long as the customer knows in advance.

  11. Keep up-to-date with payment methods if possible and allow a number of methods of payment such as cash, PayPal/transfer, credit cards or cheque.

  12. Consider offering discounts or other rewards for early payment.

  13. Keep track of which customers have paid and which still owe you money – you can use invoicing software for this.

  14. Chase late payments with a professional manner as soon as they’re overdue. The longer you wait to chase payments, the further from the customer’s mind they are.

  15. Mistakes and oversights can happen, so ensure you don’t immediately assume the customer is trying to avoid payment. It’s good to be confident and firm, but stay polite.

  16. Charge interest on overdue payments – it’s your legal right.

  17. Join a union for legal and technical support.

  18. Hire someone to collect the money. This step is more of a last resort, the kind you would use if you know you’re never going to work with the customer again. You’ll pay a percentage of the bill to the collector, but it’s better than coming away empty-handed – especially if it means you’re able to pay your own bills.

  19. Or as a very last resort, hire a solicitor and take them to court. This is a time-consuming but effective means of collecting money owed.

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