We’ve all been there, ruthlessly chasing an unpaid, overdue invoice, only to be met with no response or worse, the promise of a payment that never comes. Late payments aren’t just annoying; they can damage your business. After all, the time spent chasing outstanding invoices could be better spent developing other areas of your business. Whilst the money will help you settle your own bills to keep your company going.
Late payments cost small businesses in the UK a staggering £6.7 billion each year. Sole traders and large corporations are affected by this widespread issue too, but there are several steps you can take to conquer overdue invoices and make late payments a thing of the past.
Go digital with invoicing
With recent news that Making Tax Digital is being rolled out to a wider audience, going digital with your finances no doubt has its advantages. It’s not just the ease of paying your VAT bill that can be harnessed through the latest accounting software. Your company’s invoicing processes can be digitalised too, giving clients more ways to settle outstanding payments than ever before.
Revise your documents
Companies spend a pretty penny refining their branding and improving their marketing prowess so make sure your business’ professional look extends to its invoicing documents also. In addition to overhauling your invoice’s appearance, keep the information it contains as simple and straightforward as possible.
Display clear payment information, from the total amount and breakdown to the payment terms and your account details. You should keep the overall design uncluttered and easy to read. This way there can be no misunderstandings and invoices can be paid more efficiently.
Give clients choice
Signing up to a digital invoicing system will unlock a number of payment methods. Whether you opt to go digital or not, giving paying clients a choice on how they can settle their bill is important. Never make assumptions about what your client’s preferred payment method is. Instead give them multiple ways to pay and the freedom to decide for themselves. Offering options to pay by bank transfer, cheque and credit or debit card is recommended.
Know your rights
If you have delivered the services or goods as specified on the invoice, you have the right to be paid. Knowing your rights is a vital part of tackling late payment. Unbeknown to many businesses, you have the right to charge interest on overdue payments. Make sure you understand the finer details of dealing with late payments and refine your processes accordingly.
Need help managing your finances? Our accounting team has expertise and experience in all areas. We specialise in working with sole traders and small businesses to ensure both time and money are saved. Contact our accountants today to discuss your requirements.
