Jane runs her own small business. She loves what she does but has been spending too much time of late worrying about recovering outstanding debt. This is beginning to affect her cash flow, her self-esteem and putting a strain on her relationship with her clients.
Managing accounts and getting paid is a fundamental part of running a business, without it the business will stand little hope of being able to succeed. Doing the work is one thing but ensuring that you get paid for this work is quite another.
This may seem basic advice but going through the pain of chasing debt can cause very real problems:
Jane can put in place simple measures that can help to reduce the need to chase overdue invoices.
Jane should ensure that she sends invoices to her clients in advance. This will give plenty of notification that money is owed and when it is due. Her clients may need time to retrieve money from their own clients before a payment can be made.
Jane needs to use a simple invoice template. As a minimum, this should include her company details, date work completed, itemised description of work completed, invoice numbers, VAT details, how to pay, payment due date and her company terms and conditions.
Rather than wait for problems to arise, Jane should follow up with her clients after any goods or services have been completed. She shouldn’t assume that clients aren’t paying because of lack of money. They may have a dispute about the goods or services delivered that she is unaware of. By following up Jane will have peace of mind, make her appear proactive and enable her to resolve any problems without affecting the timeline of the payment.
Jane should ensure that her business contacts are updated regularly including names, titles, emails and telephone numbers. Sending a letter or an email to the wrong person can cause unnecessary delays.
Having a complicated paying system will not help businesses to pay her invoices. Jane should keep this side of the business simple and ensure that all payment methods are included on the invoice and provide her clients with more than one way to pay. Examples are credit/debit card, PayPal, QuickBooks “Pay Now” button on your invoices and even the good old cheque.
To help mitigate against chasing for debt Jane needs to spend time putting together a debt recovery procedure that she can fall back on when a problem arises.
Jane should avoid getting stressed or worried about chasing a client for an unpaid invoice. Like all other aspects of her customer service, she should be polite, professional, and helpful and absolutely avoid being rude or demanding. Great customer service is often tested to its max when dealing with problems especially those concerning money. She needs to remember that she has earned the money and without it her business will fail.
By using a system such as QuickBooks Jane can send her clients a simple, easy invoice at the click of a button. She can even schedule invoice reminders which will save her time and reduce her stress levels.
Jane can utilise the help of a third party who can chase the debt on her behalf. At boffix we charge £2 for each debt chased. Boffix can chase unpaid invoices, keeping you updated in the process and see that your customers pay quicker whilst you maintain customer relations without pushing them away.
By using a third party you can delay getting a solicitor involved as this could lead to more expenses as well as destroy any future relationship with the client. How you manage chasing debt is up to you but unfortunately, this will not go away and does need to be dealt with one way or another.