Getting Paid on Time – Is there a trick to it?

It’s very British to avoid talking about money altogether and yet it is a fundamental part of business. So how can we give ourselves the best chance of getting paid on time…?

Suffolk has many micro businesses and SMEs, with record numbers of new businesses formed last year. As a county, we benefit from a rich tapestry of entrepreneurs and business people offering a wide range of goods and services and a good level of customer service.

Many of these businesses don’t have a huge amount of capital resting in their bank accounts specifically to enable them to offer credit terms to customers – and why should they? They could and should be using that money to reward their staff for a job well done or to invest in growth, training and infrastructure.

It’s completely reasonable to request payment within 10 or 14 days – or even up-front providing it’s agreed in advance. So why do some businesses regularly settle invoices late? Why are some people content to enter into an agreement without following through on the financial commitment they have made in a timely manner? Why indeed, if the payment cannot be made on time, is there rarely an apology or communication of when the invoice will be settled?

It’s nice to pay invoices as and when they come in, though more common to allocate some time once a week where you clear your backlog. Only doing this once a month is not ideal but, provided the terms are agreed in advance with the supplier, that’s fine too. If you suspect you may have a potential cash flow issue, explain this to the supplier before the agreement is entered into and agree terms or delay the timescales to fit.

Of course, this all assumes that the supplier has laid out their terms in advance. More often than not, it’s the communication of and agreement to the terms in the first place where this whole process falls down. As a supplier of goods or services, you’ve got to make sure you’re clear on your terms of business up front. It’s also a good idea to double check to whom the invoice should be sent to avoid any unnecessary delays.

Whichever way you look at it chasing and being chased for payments is time consuming, awkward and unnecessary. So, to avoid all that palaver, all parties need to communicate clearly, agree terms of business up-front and then honour those terms on time and in full.

Contributed by Hana Dickinson, Director, The Bridge Marketing