In a similar sense, firms would not be able to pay for any expenses, such as employee costs, regular bills, and have enough money left over to invest back into the business and ultimately attain a bigger profit.
Businesses obviously survive by charging their customers for the products and services that they use. The trouble is, some customers hardly ever pay on time, if at all. Having late-payers or non-payers can represent serious problems for businesses, especially if they are only small firms, as it could potentially put them out of business.
If you want to make sure that your business gets paid on time for any invoices that it issues, check out these top tips below!
Invoice As Soon As Possible
Some businesses, often at the request of customers, will only invoice in “bulk”. The problem with doing this is you don’t actually know when you will have accumulated enough of a billable total to be able to invoice your customer.
This means you could possibly have to wait several weeks or even months before you can invoice them! Obviously if the amounts are very small (i.e. a few quid) then it’s not a big deal, but when you are talking hundreds or even thousands, these amounts soon add up to significant figures!
Obviously it’s your call, but I would highly recommend billing your customers as soon as you have provided a product or service to them.
Make Your Payment Terms Clear
One of the oldest excuses that customers use to try and get out of paying for something is that “I thought your terms were 30 days”. In many cases, firms only offer 7 day or 14 day terms, so it is imperative that you make this clear to them before you start supplying them with goods and services, and on the invoices you issue to them.
Advanced billing systems, such as convergent charging systems used by telecom companies, ensure that these terms are strictly adhered to otherwise customers face risking a disruption to their service.
Credit CheckYour Customers
Before offering them credit accounts, you should ensure that you credit check your customers so that you can determine their creditworthiness. Just like with individuals, companies can also have good or bad credit files.
One of the best ways of lowering your risk of non-payment is to work out what the likelihood is of them not paying, and a credit check is an invaluable tool for such a purpose.
Chase Them For Payment
If all “goes quiet on the Western front”, then it probably means you won’t get paid on time (if at all). Therefore, the best way to ensure this problem doesn’t happen in the first place is to make regular contact with your customers, even if it means sending them friendly reminder letters that their invoices are due for payment.