Overdue Payments? How to Secure the Money You’re Owed

Overdue payments can cripple small business cash flow. Learn how to collect your money faster and pin down reluctant clients.

Late payment has put many small businesses on the brink of insolvency. Nearly a quarter of SMEs have suffered at the hands of dawdling clients. Retrieving your cash isn’t always easy, especially if you want to avoid making a legal claim. But with poor cash flow affecting your own ability to pay bills, it could be time to acquire the services of a Milton Keynes accountant.

Prevention is always the best cure. In order to secure prompt payment, you need to be just as efficient when issuing it. Implementing a water-tight accounting system will help keep things ticking over. Speak with an accountant about the best strategy for your business, then follow these five simple steps to proficient payment collection.

Outline Your Payment Expectations

Small businesses often lack consistency. If you adopt a different payment process for each client, you will soon find yourself in an unmanageable mess. While it can be tempting to give new clients some leeway, the favour can quickly backfire. Keeping cash flowing through your enterprise is your number one priority.

If your clients know your guidelines from the off, they can’t make excuses. Ensure payment information and timeframes are obvious on both your website and your invoices. Expect payment to be made within 30 days? Spell it out in big, bold letters.

Automate Your Reminders

Milton Keynes accountants have been using invoicing automation for years. Sending out bespoke reminders to tardy clients is a proven solution. But what if you need reminding yourself?

Accounting software deals with the process for you. Now, there’s no need to waste your own time messaging others. Pre-set reminders can be sent out at regular intervals, specifying the urgency of the payment. Let late payers chase you, not the other way around.

Run Credit Checks

Most late payments can be prevented by a simple credit check. If you’re concerned about a new client’s financial situation, then it is within your rights to investigate their credit history. Follow up with a Companies House search to ensure they are a legitimate enterprise.

In the event that their credit score poses a risk, think carefully before accepting their business. Some smaller businesses may simply be overcoming previous financial hiccups. Talk through all your options with a Milton Keynes accountant and pass on any companies that don’t meet your expectations.

Learn Your Client’s Payment Behaviour

No matter how clear you are with your payment options, some businesses will always stick to their own patterns. If these clients happen to be established partners, then you may benefit from learning how and when they like to make their payments.

Understanding the finer workings of their business can help you deliver the easiest payment option. In the same way your business relies on their money to function, they may be waiting on overdue invoices of their own. Come to an agreement based on a mutual interest. A valuable client is not worth losing over a few days of inconvenience. Regular business sometimes comes at a slight cost. As long as they aren’t taking liberties, you can still forge a strong working relationship.

Know When to Let Go

Of course, not every deal can be compromised. When a client repeatedly flaunts your payment policies, it’s time to cut the cord. Late payment laws allow you to claim interest on the money you are owed after thirty days of invoicing (unless an extended payment period has been agreed). You can also claim a fixed debt recovery cost based on the amount you are owed.

Once the client has settled the debt, you should sever ties immediately. Even if they are one of your biggest customers, you are likely to go through the same cycle in the future. No company is bigger than the law and the legal process will simply drain time and money from your enterprise. Speak with a Milton Keynes accountant to determine whether you are eligible for further compensation. Then, close the book and move on.

Don’t let late payments run your small business into the ground. Call Milton Keynes accountants Aston Black today on 01908 904794 for a free, no-obligation consultation, or get in touch via our contact page for more information on the services we provide.

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