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Ways to get your customers to pay you on time

For all kinds of firms, late payment of invoices is a big problem. In the UK, late payment of invoices is almost endemic. According to the Asset Based Finance Association (ABFA), the amount owed to UK firms has risen by 36% in just four years, so late payment is a growing issue.

It is definitely something a firm needs to keep on top of if they want to avoid serious cash flow issues. Here we have put together some tips to help you to get more of your invoices paid in a timely manner:

Set out clear payment terms

Make sure that it is clear when the invoice should be paid. When taking on a new customer, go through your payment terms and conditions with them.

If you have an early payment discount in place explain this. Also, explain any late payment penalty. Make sure that the late payment penalty is included in your terms and conditions and contract.

Carry out credit checks

If you are taking on a large customer, you want to be sure that they will be able to pay, so get a credit check done before accepting the order. It takes moments to do this, and it will save you money.

Issue your invoices on time

Issue your invoices straight away. Do it as you send out the order or each morning or evening. The sooner you bill your customers the sooner you will be paid.

Make paying you easy

Give your customers a choice of ways to pay. The easier it is for a client to pay you, the more likely it is that you will do so.

Use discounts and penalties

A great way to get paid as early as possible is to offer an early payment discount. Usually, 5% is a big enough discount to tempt most companies.

Put in place penalties for late payment. Charging a fee or interest on the amount owed can encourage more customers to pay on time.

Monitor payments closely

Having done all of that do not forget to look out for late payment and chase each invoice quickly. Have a well-defined debt chasing process in place and follow it.

Start sending reminders immediately and continue at set intervals. If you have a penalty in place remind the customer of that and outline how big the bill will become, a month or two down the line.

Do these things and you will considerably reduce the risk of your invoices being paid late.

Posted by Mark
October 2, 2015

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