At a bookkeeping meeting yesterday I heard about a client that hates to chase her clients for outstanding invoices because ‘they’ don’t like it. Now that company is struggling to stay afloat.
Although this business deals with high end clients they are afraid to chase their clients too much in case they lose the regular business.
While it is great having your own business if you are afraid to ask for monies that are owed to you your business will not last. Once you have decided on your credit terms and agreed them with your client you should stick to them. The best way to do this is to ensure that the invoice is sent to the client as soon as the work is done or on a specific date of the month, depending on the type of service you have provided. If they start to delay payments then ring them up a few days before the payment is due to check it is on their system and confirm the date the payment is going to be made.
Requesting them to pay by bank transfer means payment can be made quicker. Sending a monthly statement showing everything due means there is no excuse if they say they have not received the invoice.If it is a product you provide then ensure a credit limit is set, this way if they are near their limit then request payment before the next order is completed. If the client is unhappy about this then consider whether you really need this client. At the end of the day you are a business not a charity. Providing credit is the bank’s job not yours. Late payment by your client’s will also affect your cash flow and your ability to pay your creditor’s which affects future purchasing power.
If you do not like asking for payment then outsource this to someone who can do it. There are credit companies that specialise in this or ask your bookkeeper to include it within their remit.I personally have it in my engagement letter that if payment is not received by me by the required date I have the right to stop working until payment is made. As yet I have not had to do this but I would rather spend my time on clients that are going to pay than on those that are not.