You’ve just completed your work on time and on schedule, doing what you and your business do best and now all you have to do is collect your deserved payment. However, what happens if you haven’t been paid yet and the invoice is overdue.
Late payments are something that hundreds of thousands of SMEs experience. Out of 1.7 million SMEs in the UK, 640,000 say they have to wait beyond the agreed terms for payments, according to Bacs Payment Schemes.
Companies will often specify payment conditions upfront but if dates have not been specified then revert to the government policy which states: unless you agree on a payment date, the customer must pay you within 30 days of getting your invoice or the goods or service.
There are several prompt actions to encourage payment, these include sending follow up emails, calling up the companies accounting department or talk to the business owner directly if it is a small business but this may not always lead to results and can often be more hassle and counter-productive.
Government legislation states, after 30 days, you have the right to charge a late payment fee. This is 8% of the fee for each day your invoice is late (you don’t count the first thirty days) and a one-off debt reclaiming fee.
Recently, we’ve found that when you allow your customers to pay their invoices by credit or debit card, payment time can be reduced to a third! On average, the time gap in payments is 60 days from sending your invoice. However, if your invoice includes the option of paying it with a card, the time gap to being paid can be cut down to 20 days!
Late paying customers can often lead to your company facing cash flow crisis, it can be hard to believe there might be a solution but there are steps you can take to overcome the problems delinquent payments cause and to avoid them happening again. Make sure you sign up to our website to have access to our E-book which is full of tips and advice on how to get paid quicker.
It can become a stressful job keeping a tab on all your invoices and whether you been paid or not. It is harmful to cash flow too and we understand its importance. The new Muse app is focused on changing the future of late payments and cash flow by combining cash flow forecasting with invoice finance so you never have to wait for an invoice to be paid again.