As a small business being paid on time is very important. If one payment is late it can affect every aspect of your business. In Ireland, businesses are supposed to be paid within 30 days. The Prompt Payment of Account Act, 1997 is meant to ensure this, however, if you ask any small business owner they will tell you that this act has little to no impact on getting their payments in time. It’s all very well and good if you’re a big company and can pay for someone to chase up your invoices but as a small company what can you do?
Keep On Top of Invoicing
Know who owes you what. There are free invoicing services like Bullet to help you with this. Properly format and provide all necessary information, such as your bank details. There is no point in delaying payments because you have not provided the necessary info. Make it as easy as possible for the bill to be paid. It is also a good idea to provide multiple payments options or methods to accommodate your debtors.
You should ensure that you have sale and supply contracts in writing. These contracts should have fair and realistic payment terms. It’s recommended that you give 14 to 30 days for the invoice to be paid. Agreeing clear payment terms is crucial to having your invoices paid on time. If you use language that your customers don’t understand on your invoices, it will delay payments either because of queries or because your customers didn’t understand the terms.
When to Send
You should try to send invoices as soon as possible. When sending invoices, address them to the person who actually pays or authorises the payment of the money owed, whether this is the accountant or the owner of the business. Try to send invoices on the same day each month so that customers know when to expect an invoice from you.
Implement a late fee. Being honest and fair with your suppliers is important, but a late payment can be debilitating to your small business, so you shouldn’t be afraid to be hard on debtors who don’t pay attention to the due date. Having a penalty for being late is at least a good incentive for suppliers to take note of the due date.
Another option if you’re invoices are coming in late is to consider invoice financing. Invoice financing allows you to access a percentage of the value of the invoices you’ve raised. GRID’s invoice financing option allows you to have the advanced cash in your account by the next working day; allowing you to keep your business on strong footing. If the customer does not pay their invoice by the due date GRID starts a pre-agreed collections process. You will be kept informed at all times so that you always have the opportunity to intervene to preserve your relationship with your customer.