Getting paid is becoming a bigger issue than ever before, and it’s vital that you stay in control of the process.
I’ve written this blog post specifically for members of Herefordshire Means Business, and attendees of their Signature Breakfast on Wednesday 26 April 2023, where I went through this at lightening speed!
Scroll to the bottom for special offers and referral links for some of the software I talk about
So what happens if you don’t get paid?
Sleepless nights for one, and potential health and wellbeing issues if you don’t take control.
Also the inability to pay your employees and suppliers, damage to supplier relationships, and difficulty to make plans.
Xero has a campaign to end late payments for good, and are pushing the UK Government to tackle this.
Add your name to their open letter to Government here.
Let us guide you through all of the ways that you can improve your processes to ensure that you get paid quicker.
Starting before you even make a sale, right through to what to do if a customer ghosts you and doesn’t pay, and everything in between.
You should take away at least 5 actions you can put into practice straightaway, including some clever software suggestions to do the hard work for you, and free up your time.
1. Before you even make the sale
Carry out a Credit check
- This is so easy to do now!
- You should always check your customers out online before doing any work.
- Again it’s about avoiding a world of pain when you try to collect payment.
- We love Satago, as it allows you to run a full credit check, and a risk profile on your potential customer.
Agree the scope of work
- Discuss what is and isn’t included, and what would create an extra charge.
- It might feel easier to avoid these difficult conversations, but it is going to create a so many problems later on if you try to charge for something that wasn’t discussed properly.
- Even worse if you end up providing products or services for free!
Agree terms for payment
- Do this upfront, and don’t be afraid of doing so, because it will cause problems down the line.
- Our payment terms are 7 days from invoice date. You just don’t need 30 day payment terms anymore.
- Check out our blog on how to get paid faster, for the very archaic reasons for 30 day payment terms!
Can you ask for advance payments?
- This could help your customer’s cashflow as well as yours, so consider:
- Payment in full, in advance of carrying out any work
- 50% deposit up front
- Stage payments throughout the project
- You can set this up really easily with Ignition which is incredible proposal and payment software.
Get terms signed and agreed with your customer
This is so easy with the right software. We use Ignition, which enables us to very quickly:
- Create a proposal with a quote
- Provide the customer with 3 options
- Choose different ways to charge (on completion, upfront, deposits, and by unit)
- Build terms of engagement and service agreements
- Take payment details upfront
- Automatically send invoices and collect payment
2. During the work
- Keep talking to your customer, look for opportunities to upsell
- Have a process in place to capture any extra requests and agree how you’re going to charge these with the client
- You wouldn’t go into the supermarket for a bag of apples, and pick up a box of kiwi fruits without paying for them, so make sure the customers don’t do the same
- Record time spent and products used
There are lots of apps to help you to record time and charges, depending on your specific needs, but a great starting place is Xero Projects.
- This is a paid for feature within Xero, and will allow you to:
- monitor separate projects
- set up specific tasks for each project
- track time and costs
- view financials for each project
- send customised invoices
- collect payment quickly
3. Now you’re ready to invoice
Send your invoices straightaway
- Don’t wait til the end of the month, invoice as soon as you possibly can.
- Use online accounting software like Xero, as this will keep everything tidy, and save you heaps of time.
- You’ll also have all of your invoices recorded in one place, so that you can see how much you’re owed, by whom, and by due date.
- You can even send invoices from your phone, so no excuses to fire up your computer.
- Check out our blog on the benefits of online accounting software.
Link payment services to your online invoicing:
This will enable your customer to click a button to pay your invoice as soon as they receive it!
Xero’s research confirms that you’ll get paid twice as fast if you have more than one payment service set up.
Apps we love for quick online payments:
- Ignition will generate your invoice and collect payment, as long as your customer has provided their payment details when accepting your proposal
- GoCardless Direct Debits:
- Yur customer signs up for a direct debit, and GoCardless looks at Xero every day for invoices with today as the due date.
- Where it sees an invoice with today’s due date, it collects payment via the DD mandate.
- GoCardless Instant BankPay:
- This new feature uses open banking to allow your customer to pay immediately, using their open banking logins.
- Your customer clicks the magic PayNow button on your online invoice, and pays with their debit or credit card
- IWOCAPay: your customer clicks the magic PayNow button and can either pay straightaway via Open Banking, or pay in 3 instalments
All of the above solutions update Xero to show that the invoice has been paid.
4. Chasing payments
This is never the fun bit. You’ve provided the goods, or done the work, now you need to get paid.
It’s crucial to keep on top of this from the start, don’t wait until the payment is overdue.
Again online accounting software is a real help, as it highlights who owes you, and the oldest and largest invoices. You can also add notes and expected payment dates.
Send reminders for payment as soon as you can
We love chasing software like Satago, as it links to Xero, and sends scheduled emails based on your invoice dates in Xero. You can send:
- Reminders before the due date
- Reminders with increasing severity as the debt gets older
- Escalated reminders to different people (you may start with the accounts department, but escalate to the manager or director as the debt gets more and more overdue)
- Thank you emails when payment is made
What if your customer won’t pay?
We have a whole blog dedicated to what to do if your customer hasn’t paid you
But to keep things brief:
- Don’t do any more work! – make sure you let the customer and your team know that this is the case
- Talk to your customer – find out what the problem is. They may have missed the invoice!
- Offer a solution – it may be something they’re disputing, so come to an agreement on a way forward
- Agree time to pay – this will help their cashflow, and means that you’re getting regular payments rather than nothing at all.
- Invoice finance – where your invoices are passed to an invoice finance company like Satago. You can choose all your invoices or just a couple, as Satago links to Xero
Agreeing time to pay:
You can keep control of the agreed payment plan with the options below:
- IWOCAPay – offer your customers a method to pay in 3 instalments, while you get paid straightaway!
- GoCardless also offer a subscription feature, so you can set up a payment plan for your customer.
- Check out their subscription features here.
Escalating the debt
If all else fails, then you’re going to have to get serious, but you still have options:
Check out our blog for all the ways that you can escalate the debt, including:
1. Small claims court
You can apply via gov.uk and make a claim online here.
There will be court fees to pay, starting at £35, but you can add this to what your customer owes.
Before getting legal advice, you could try Civil Mediation. This involves a third party mediating between yourself and your customer.
More info here from the Civil Mediation Council
3. Debt collection agencies
You may want to instruct a debt collection agency to collect overdue debts. Satago offer this as part of their service, or you could use a local solicitor like Harrison Clark Rickerbys in Hereford.
Special Offers for Herefordshire Means Business:
- Satago: 25% off for one month: referral link
- Ignition: 50% off for 3 months: referral link
- Xero: 50% off for 6 months: referral link and voucher code Q124BK6
- IWOCAPay: £200 voucher (£100 for you and for us): referral link
- GoCardless: referral link
Check out our 2 main blogs that support this one:
Sign Xero’s open letter to Government urging them to tackle late payments.
Click on our How We Work page, if you’re interested in working together. We’d love to hear from you!