Getting paid late by your customers can have a major effect on your own cashflow. When your customers pay on time, you can then pay your suppliers and employees on time as well as yourself.
Set Customer Agreements with your payment terms.
When you start to work with a new client, make sure you have a contract agreement with your terms in writing. Have the new client sign your agreement that shows your rates, payment due dates and the terms of the job you are doing for them. That way for them signing they are agreeing to your terms and conditions.
Dealing with larger organisations
Some larger companies need purchase order numbers to show on your invoices. Make sure you know what they expect so it matches their systems to pay. They tend to have a large amount of other “vendor” invoices sent to the accounts payable department to be able to pay you. If their accounts department only pays in a batch run for example in the middle of the month, make sure you send your invoice before their batch run date.
Some business owners are so busy preparing quotes and doing their jobs that they don’t always get a chance to invoice as quickly as they should to get paid. Invoice as soon as possible when the work is completed and have the invoice ready to be sent.
Cloud accounting is best to handle this for you if you are doing invoices manually. You can also prepare quotes that once accepted convert to invoices and that way you can track payment of the job.
Follow up on invoices
If you do use a cloud accounting software program, invoice reminders can be sent when the payment is due. At least perhaps even send a statement to show the customer other outstanding invoices if applicable.
Sometimes they may miss the first invoice and receiving the reminder or a statement just may trigger them as to what is outstanding.
If chasing money becomes an issue, ask for deposit upfront before the work commences. You may need to buy materials to start the job and that way your not out of pocket at least.
Keep an eye on who owes you!
Again this is where accounting software is great to either see on your Dashboard or run reports as to who owes you and when the sales invoices are due to be paid.
In conclusion –
Follow up on an overdue invoice and ask when payment will be made. Perhaps you can make mutual payment arrangements as in offering your customer a payment plan because lets face it times can be tough re Covid 19! Its better than not receiving any money at all for your hard earned work!
Want to get your books in order without adding more work to your plate? Get in touch with us today.
Need more help?
Phone your local Hawkesbury MYOB and Xero Certified Bookkeeper Sally: 0414 522 778