Ten Top Tips for Getting Paid on Time
Whilst you would think everyone would prioritise getting paid, often relationships with customers or clients, the next job, being busy, and keeping people happy often gets in the way of actually invoicing for work done and chasing up payments. So here are our Ten Top Tips for Getting Paid on Time.
1. Know who your contract is with.
This might seem like an obvious point but in the days of agreements by email and less formal contracts it is important to know who your agreement is actually with. Is it with the person arranging the deal or are they arranging it on behalf of someone else. Confirm this in writing.
2. Clarify the address of the person or company you are contracting with.
If this is a registered company then you will be able to find this online at Companies House, but if the company is a small business, or an individual and not registered then you will need an address if you (or we) have to chase payment more formally. Beware of contracting with people outside of the UK as it is harder to chase payment and for small sums, not always cost effective.
3. Agree the actual payment sum in writing.
It is easy with emails going backwards and forwards with negotiations for the actual payment sum, or agreed performance to be unclear. Both parties agreeing to the proposal they made, not each others. Make your last email or letter a very clear statement which confirms the payment sum and your payment terms.
4. Agree the payment terms.
Larger companies you may be trading with/working for might have their own 'standard terms of payment'. Make sure you check these and are happy with them. Payment terms can often be 90 days which is a long time without payment.
If the person/company you are working with doesn't propose payment terms, or even if they do then you can propose your own.
Clarify in writing before work is done whose payment terms you are working under.
5. What if no payment terms are agreed?
If payment terms are not agreed or set out in your invoices then The Late Payment of Commercial Debts (Interest) Act 1998 states that payment is late after 30 days for public authorities and business transactions after either:
the customer gets the invoice or you deliver the goods or provide the service (if this is later).
You can find more information on the governments website which includes exclusions or of course get in touch with us for assistance.
6. Send an Invoice
Again this might be obvious but you should send out an invoice promptly after the work is done, or the service provided. You can’t begin to chase payment or follow up an overdue payment unless an invoice has been issued. Do this as soon as you can.
Your invoice should include basic details
Send the invoice for the attention of: X at Y address
Where to Make Payment To:
Date of Invoice:
Value of Invoice:
It can also include your payment terms.
7. Send a Polite Reminder a few days before payment is due
Whilst this is not strictly necessary, a nudge in the right direction reminding the person paying the invoice that it is due to be paid never did anyone any harm.
Double check at this stage that you used the right email address/postal address for sending the invoice and check names and details are correct.
8. Chase your Overdue Invoice Promptly
Set a reminder for when payment should be made. Once the invoice is overdue you can re-issue your invoice to add interest and ‘set’ debt recovery fees. You may choose not to do this immediately depending on your relationship with the business that is not making payment, but you can do so.
9. Calculate Interest and Fixed Sum for Chasing Payment
In the days of low base rates this will not be significant but it is worth highlighting to the business making payment that ‘interest is accruing and will continue to accrue until payment is made’.
The Fixed Sum can also be added.
Amount of debt What you can charge
Up to £999.99 £40
£1,000 to £9,999.99 £70
£10,000 or more £100
10. Pro-actively chase the overdue payment.
Pro-actively chase the overdue payment by letter, email and telephone. If you followed the process at the beginning of our Top Tips you should have all the relevant information to do this.
If payment is still not made you will need to consider taking legal action.
Posted on 1 March, 2017 by Ortolan