- 11 Nov
How To Get Invoices Paid
This post explains the steps that you can take to get invoices paid.
How To Get Invoices Paid
When you offer your customers trade credit, typically you will raise a credit invoice that you send to the customer to request payment at a given future date. At that point the customer becomes your debtor.
In some trades, such as construction, instead of an invoice an "application for payment" is presented to the customer. Which ever method is being used, the issue that it creates is that a supplier often has to wait for their customers to pay for a particular transaction, whilst having to lay out money for raw materials, staff costs and other expenses in advance.
Credit Control Systems
This can create a cash flow pressure on the business. The key to ensuring that your customers pay your sales invoices in a timely fashion, is by implementing an effective credit control process. We have put together a comprehensive guide to running your own credit control system, which gives some help as to how you could structure that system, to maximise the possibility of being paid on time by customers.
Unfortunately, if you are extending credit terms to your debtors, no matter how effective your credit control system, you are still likely to have to wait a period of time in order to receive the funds relating to any particular sale. Typically, this could be 30 days, as the most common credit terms extended within the UK are 30 days. However, in some trades the credit terms demanded are far beyond this, sometimes 60 to 90 days, or even more.
It is important to understand distinction here between the period of credit that is granted, and the time that a customer may take to pay. The latter may reach well beyond the period of credit that you are willing to grant them. If your cash flow is such that even an effective credit control system is not sufficient to solicit payment quickly enough, there are other methods of liquidating your invoices quickly, in order to raise cash.
Receivables financing is a service whereby a finance company will provide the majority, or all of the value of your invoices upfront (less charges) so that you do not have to wait for your customers to pay. These advances against invoices are called "prepayments", and they can significantly improve the cash flow through your business.
When you raise the sales invoices on 30 day credit terms, you will be waiting at least a month to receive payment. If you are using a receivables financing facility, you will receive the majority of the value of that invoice immediately.
The only other option is to demand payment in advance, or cash up front from from customers. However, this can make you appear uncompetitive when compared with your competitors. It is for this reason that most businesses end up extending credit terms to their debtors.
If you are having an issue with the time that is taking to get an invoice paid, please speak to Sean on 03330 113622, to find out how we can help you accelerate your cash flow. Even if you have a single invoice that you need a prepayment against, this can be arranged without any obligation to receive funding against the rest of your sales ledger or future invoices.
You may also find that your business could benefit from having a professional credit control outsourcing company dealing with the collection of your outstanding invoices. This can be in addition to providing prepayments, which is called factoring, or it can be provided on a stand-alone basis
- 11 Oct
Credit Control Tips
Credit control is a key part of the services that we find for our clients, therefore I am always on the lookout for credit control tips that we can share. Recently I have seen a couple of useful articles, listing some invoice chasing tips.You can also read our free guide to running your own credit control function.Veritas shared an AAT publication - "Chasing Late Payments Without Awkwardness"....
- 13 Aug
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- 23 Jul
100K Average Sales Outstanding Are Not Being Chased Up.
According to new research on behalf of Lloyds Bank Commercial Banking, London based businesses are owed an average of £98,000 in outstanding customer invoices, and a third of UK businesses that were paid late in the last year, DID NOT chase up their outstanding payments.This research was reported by Business Money (10th July 2019), and it is unbelievable to think that London businesses could...
- 13 Jun
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Analysis of a company's balance sheet allows you to understand what assets and liabilities fall within the business, and whether the business is liquid (has enough liquid assets to pay its short term creditors as they fall due) and solvent i.e. assets exceed liabilities. Therefore it can be helpful in trying to establish the financial position of a company e.g. to decide on granting a credit...
- 07 Jun
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- 06 Jun
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- 05 Jun
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- 15 Apr
Help Raising Sales Invoices To Customers On Credit Terms
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- 22 Mar
Selective Invoice Finance With Free Auto Dunning
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- 15 Feb
Saving The Annual Salary Of A Credit Controller
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- 18 Jan
Late Payment Problem?
Battling with a late payment problem? You might feel like you are all alone by recent research from Close Brothers Invoice Finance suggests that is not the case. It suggests that many other UK SMEs are being affected by slow payments, and this has been highlighted by several sources of independent research.Their poll found that 42.8% of SMEs say that late payments are a problem for their...
- 15 Jan
Solutions To Late Payments From Customers
Late payments are still causing cash flow problems for UK SMEs.An email just received from one of our new funding partners, My Muse, was headed "48% of SMEs impacted by late payments". It goes on to quote some recent Dun & Bradstreet research that has revealed that the average amount owed in late payments has increased by almost 25% over the last year to an average of over £80K. Within this...
- 14 Dec
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- 18 Jun
Why Do Large Companies Pay Late?
I've just answered a question posed online about "why do large companies pay late?".Firstly its worth mentioning that this does not apply to all large companies. We deal with numerous financial services companies who tend to pay very quickly.There are a couple of key reasons for some large companies paying late, which are explained below. Despite there having been a tightening up on large...
- 30 May
Collect Invoices Faster As An Alternative To Borrowing
There is a huge cash flow benefit to be acheived from collecting in your sales invoices faster, in a timely manner.The quicker you get paid by your customers, the more cash and hence working capital you will have available to your business, and therefore the less you will have to source e.g. by borrowing.If you have an outstanding sales ledger of £100,000, and a debt turn of say 60 days (the...
- 07 Apr
Do You Know The Standard Payment Terms Your Customers Can Take?
Did you know that the standard payment terms in the UK are 30 days from the date of your invoice?Many will not be aware that if you did not specify payment terms within the contract with your customer, there are default standard credit terms that will apply to your invoice. At the current time, those are payment within 30 days of the invoice date. You can check this for yourself on the government...
- 20 Feb
Chasing Invoices Via Social Media
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- 17 Nov
Need Help Chasing Invoices?
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- 02 Aug
Credit Control Agency
One of the credit control agencies that we work with have been able to provide some first class credit control support to one of our clients, who needed help getting their unpaid invoices collected in. The agency took over the collection of the invoices from customers and they have improved the speed with with they are paid, reducing our client's debt turn. So they have a good track record of...