The Hassle of Getting Paid

Getting Paid

It used to be your favourite day of the month or week when you were employed and received a pay cheque on schedule. It was never a concern, just a good day and probably night down the pub.

Now you are contracting, and have gone to all that trouble of finding work, provided your expertise, sent your invoice off with an expected payment period of within 7, 14 or maybe 30 days, you might find yourself wondering why you have to chase payments and why those happy paydays have become days full of doubt and grief.

Well you’re not alone. Around 60% of SMEs deal with late payments averaging at 43.4 days after the terms specified, according to BACS Payment Schemes Ltd. Such delayed payments can sometimes devastate small businesses by creating cash flow problems which can become unmanageable.

Ways that you can reduce the risk of late payments:

1. Check your client’s reliability

Ask around the company before you start work with them to find out how reliable they are for making payments. If you are still unsure, you could even do a credit check but these are not free, the information could be out of date by about 12 months and it might not be too easy to decipher. It is worth keeping in mind that this would be more difficult to near impossible for smaller companies or other freelancers than large companies.

2. Set terms and clauses

Include a clause in your terms and conditions indicating that all late payments will incur interest. You may not wish to use it depending on your relationship with your client but the option is there and you can at least point it out once a payment is reaching its deadline and still not been paid. If you are completing a rather large piece of work, it may also be worthwhile agreeing to deposit upfront, staged payments or setting a credit limit.

3. Send good invoices

You may have created your own, used a bookkeeping software with built-in invoicing capabilities, or downloaded a template from somewhere, but no matter where you get it from, it is important to send a correct invoice with clear payment instructions.

All invoices should feature:
  • the term ‘invoice’
  • a reference number
  • payment details e.g. bank account
  • payment terms, e.g. 30 days from completion (add any terms such as interest on late payments here)
  • a clear description of the services provided and when if in stages
  • name and address of the company you are invoicing (preferably the person responsible for your payment)
  • the relevant VAT information in line with the regulations if applicable.

You should double check all invoices before sending them to ensure there are no mistakes which might give your client an excuse to delay payment.

Although you can help reduce the risk of late payments, you will inevitably have to deal with them in your contracting career. The important thing is to follow up on any unpaid invoices, being firm whilst remaining calm. It is an unpleasant task but worth the time and effort. Otherwise, you are working for free. Contact us today to learn more about our accounting services.

More Blogs

Do I need an accountant as a sole trader?

Sole trader accounting can sometimes be simple: some sole traders may well find that they have no need whatsoever for an accountant. However, accountants for sole traders are an incredibly useful resource that can save you a great deal of hassle and time – and potentially even money. If you’re asking yourself, “Do I need an accountant as a sole trader?” – read on. In this blog we cover the ways in which accountants for sole traders can help, as well as how to choose the best sole trader accounting firm for your needs.

Accounting Team

Do I need an accountant If I am self-employed?

It’s not a legal requirement for those who are self-employed to use the services of an accountant. However, working with self-employed accounting professionals who understand the unique needs of the self-employed can often save you time, money and stress. Read on to discover more about the accounting needs of the self-employed, common accounting challenges you may face, and when working with an accountant makes sense.

Accounting Team

Do I need an accountant for my small business?

If you’re a small business owner – or looking to start a small business – you may be tempted to handle the accounting side of things yourself. You may think that this aspect of the business will be simple when you’ve started small…but is this really the case? In reality, small business accountants can save you money. They’re a trusted partner for a range of things, from planning and setting up your business to financial management, tax obligations, business growth strategies and more. Read on to find out how small business accounting services could improve your chances of business success…

Accounting Team