Business: Getting Paid on Time

Question: I am self-employed and over the last 12 months I’m finding it harder and harder to get paid for work that I’ve done. I’m spending a lot of my time chasing people for payment and it’s really taking a toll on my business. Is there anything I can do to make it easier to get paid?

These are tough times for many businesses. Having said that, everyone is entitled to get paid for work they’ve done. The money you receive for your work is what enables you to stay in business and it’s how you support you and your family.

Every business is unique, but here are a few tips on what you can do to make payment recovery easier.

  1. Put a formal agreement in place– Whether you use a detailed contract or a “terms of business” document, this document should clearly set out the agreement in place. Having a written contract may give you a legal edge if there is trouble later on. Not only does having a contract serve as a record of your agreement, it also gives the customer a clear understanding of how you do business. Your solicitor will be able to help you put standard contracts in place and, depending on your industry, advise you on reasonable terms to include.
  2. Invoice promptly–Send an invoice as soon as work is done. Most customers won’t pay you until they receive an invoice. The longer the time period between when you finish work and when you invoice the customer, the more likely it is that you will have trouble getting paid. Before you start work, your customers should clearly understand how and when you expect to receive payment.
  3. Offer a discount for early payment–In many industries discounts are offered to customers who pay early. You can do the same thing to encourage your clients to pay you promptly. For example, if your invoices are normally due in a month, but you’d like to be paid sooner you can offer clients who pay within 7 days a discount.
  4. Make that telephone call–Sometimes there’s no avoiding it. You have to call your customer and ask for payment. When you are faced with this challenge, it’s a good idea to plan in advance what you are going to say. The people who get paid first, are the people who ask first.
  5. Take professional advise – your solicitor and accountant can be your best advisors in tough economic times. Not only can your solicitor put written terms and conditions in place to make collection easier, they can also advise you on the legal steps and costs involved in collecting debts.
  6. Find out more about how we can help you collect bad debts.
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