Show me the money
Sep 10 2008
Payment terms are often a guideline as opposed to a set rule for most businesses. If you’re self-employed or run a small business you’ll know the frustrations of getting a debtor to pay up.
The doublespeak of accounts is bewildering as legitimate processes become a cover for lies: payment runs, purchase orders, raising and signing cheques, not to mention obscure invoice queries. These tactics can turn weeks into months of waiting. A lot of good companies have gone under not because they didn’t win business – they just didn’t get paid for the work delivered.
It’s an issue that is only set to get worse over the coming months. In an ideal world, you want an easy-going relationship with your customers, but if money is owed don’t be afraid to ask about the delay. It’s not personal, it’s business.
To make your life easier, be sure you’ve got the basic elements of sound credit control in order, such as:
- terms and conditions
- price
- arrangements and timetable for delivery
- payment terms
- the ability to charge interest on late payments.
Moreover, you can credit check customers and reduce risk to your business by asking for a deposit before supplying goods or services. This may seem overly optimistic but if you don’t ask, you don’t get.
Research shows that late payment is costing businesses around £4 billion a year. It’s a figure that will certainly rise so don’t let yourself be a pushover. That isn’t to say you should be firing an order from Her Majesty’s Court Service straight away – after all, everyone, at some point in their life, has money worries of one kind or another.