The issue of late payments has featured heavily in recent news. One example being Waitrose, along with other supermarket giants, amending payment terms with their smallest suppliers. The major retailer has committed to paying suppliers within seven days. This shift follows growing concerns over late payment between UK businesses, particularly for SMEs.
If you’re a small business owner you may be familiar with the difficulties and possible consequences surrounding late payment. A study found that 52% of UK business owners worry about unpaid invoices, and some spend 1.5 days chasing payment per month.
Having a solid payment strategy should facilitate the timely payment of invoices, and similarly, reduce the number of those outstanding.
Here are 4 simple steps to receiving payment on time:
1. Provide a detailed invoice
Often times clients give poor excuses for why they haven’t paid you. A common defence is they never received your invoice, or there was insufficient or incorrect information on the invoice which meant they couldn’t process it.
To avoid the latter make sure your invoices are as detailed as possible and contain a VAT number, the invoice number, bank details and, if applicable, a purchase order number.
2. Give a gentle reminder
There’s no harm in sending a friendly reminder if you haven’t yet been paid and there are less than seven days until payment is due. You may find this soft yet firm approach prompts some clients to pay. After all, some may have genuinely forgotten to process your invoice and will make a point of doing so as soon as they get your reminder to ensure they don’t forget again!
3. Highlight the outstanding invoice
Once payment has become overdue don’t be afraid to send another letter stating exactly that. You can still be friendly but fair in your approach, although you need to show you’re serious about your payment terms and will not stand for late payment.
4. Instruct us
If, within 14 days after you give notice of payment outstanding, your client still hasn’t paid then it is time to instruct J&P Credit Solutions to collect the money for you. We have more than 125 years’ experience in debt recovery and often find that sending a Letter Before Action results in payment as default payers want to avoid the threat of proceedings being issued.