Improving your cashflow
You’re in business to make money so no matter how many orders you’re getting, if you’re not getting paid you might as well throw money out the door. Here’s some ideas that should help get your invoices paid, reduce your debtor days and improve cash management in your business.
How to invoice properly
Read our article on how to raise an invoice to check your invoices have the information required by law, plus some suggestions on what else you could include to increase your chances of getting paid.
Make your terms and conditions of business clear, and make sure they’re understood before you provide any goods or services. Your terms and conditions of business should include how late payments are handled.
How to get paid quicker
- Make sure your invoices are accurate and easy to read
- Include details of what payment methods you accept, and the payment deadline date
- Give an incentive to pay early, and charge a penalty to late payers
- Don’t be reluctant to chase late payers. Unless there’s a problem you should expect payment by the due date
Once you’re established and have built up a track record, you can speed up the payment of your invoices by using a invoice factoring or invoice discounting service. For a fee (usually percentage of the value) they’ll pay your invoice immediately and take over the chasing and collection of your invoices.
Managing your cash flow
If you buy goods or raw materials on credit make sure your customers have to pay you before you have to pay your supplier!
Get your suppliers to agree to your terms and conditions of purchase.
Adjust ‘payment due by’ dates to allow for public and religious holidays or traditonal holiday periods such as August and December. Contact your customers to check they’ll be able to meet the deadline date. The last thing you need is a large outstanding invoice and the only person who can approve payment is away for 2 weeks!
Worldpay simple payment systems
Worldpay is one of the options for taking credit card and debit card payments. It’s a professional and secure way to take card payments face to face using a card reader, or over the phone. They guarantee PCI compliance and have a 24×7 UK based help desk. Find out more about using Worldpay.
Do you really need to give credit?
In an ideal world you’ll get paid in advance and for lots of businesses that’s easily possible.
If it’s not possible, aim to get payment at the same time the goods or services are provided.
Only if neither of these options are possible should you deliver something before you’ve been paid for it. If you do, make sure your terms and conditions of business clearly state what your payment terms are and get your invoices out ASAP, ideally on the same day, especially if it’s for a big order.
A word of warning: Check new customers are credit-worthy and be wary of taking large orders from them.