How to get paid more quickly this summer
By Samantha NorthAug 20162 min read
The grey skies of London don’t look especially promising as August dawns today. But here at GoCardless HQ, we hope to brighten your day just a little by exploring ways to get your incoming payments under control. Wouldn’t it be great to have extra cash in the pipeline, just in time for summer?
For many small businesses, late paying customers are a constant headache.
Chasing them wastes valuable time and manpower. But even worse, late payments affect your cash flow. This may cause your business to miss out on important opportunities simply because of a lack of available cash. It’s frustrating to send yet another payment reminder on an overdue invoice, only to be met with an excuse, or even worse, with complete silence.
At GoCardless, we specialise in taking payments by Direct Debit. So we firmly believe this is the most effective method for accepting recurring payments. Direct Debit allows you to take control of your payments and get paid on time. Here are a number of additional tips to handle late-paying customers and retrieve the money you’re owed.
Tips to get paid more quickly
Make sure that your payment terms are clear right from the start. State terms on your contract and repeat them on every invoice you send to customers. This should include the full amount, the due date, and any late payment penalties (yes, we’ll get to those shortly).
Send your invoice as soon as you complete the work. Some people do forget, especially those lacking an automatic invoicing setup. There’s no room for delay when it comes to getting paid.
State late payment penalties and make sure you use them. You’re covered by UK law for this, so don’t forget your rights.
Chat to your customer about possible reasons for late payment. You’d be surprised at the difference a phone call can make. You may well discover an unexpected problem and can then work with the customer to resolve it and get paid.
Make it easy for your customers by letting them choose their preferred payment method. Then set up a system where they can pay you instantly if they want to, send them payment reminders before payment is due, and make sure your payment information is displayed clearly and accurately on every invoice.
Try out credit control solutions such as Satago or Chaser. These can be integrated into your accounting workflow. They automatically email customers when an invoice becomes overdue. Businesses that use them report getting paid up to 23 days faster.
Consider using invoice factoring to fund your cash flow. Currently used by 45,000 UK businesses, invoice factoring involves selling invoices at a discount to a third party, either a bank or an independent factoring provider such as MarketInvoice. These services unlock funds tied up in unpaid invoices so that your business gets paid without waiting for customers to pay first.
And finally (you knew it was coming!) why not encourage your customers to set up automatic payments by Direct Debit? It’s especially useful for regular recurring payments as well as automatically taking payments on invoices and makes sure that you never miss a payment again. That keeps your cash flow in good shape.
At GoCardless we use advanced technology to make Direct Debit accessible to businesses of all sizes, not just large organisations. Now even sole traders can take advantage of the benefits of the UK’s most reliable payment system.
We hope you can use some of our payment tips to improve your business situation this summer. Using GoCardless lets you take full control of your payments. To learn more about how we can help you, click here.