It’s vital that as a small business owner you get your invoices right. If you’re sure that the invoice includes all the information you need for it to be payable, the due date has passed, and you haven’t been able to get your customer to pay up it’s time to get help. Don’t delay. In the worst case scenario the customer could be holding onto your money because they’re in financial trouble and if you delay chasing that money the customer could go bust leaving you with nowhere to go.
Check and double check. You don’t want the embarrassment of chasing up the invoice if you’ve got the dates wrong or don’t have all the necessary information on the invoice.
Contact your contact. Often we get work from someone in the customer’s firm but don’t have details of the right person to contact if payment isn’t forthcoming. Bigger firms have Procurement departments (and someone there will have given you the work), Approvals processes through which people check invoices and make sure the necessary people sign them off them for payment, and then they will finally end up with the Accounts Payable team who will pay. The person you first dealt with in the Procurement Team probably has no idea what’s happened to your work since you last spoke and won’t know your payment is overdue. You need to contact the Accounts Payable department with all the relevant information to allow them to identify your invoice and firm out why payment hasn’t been made.
Check when the money is due. Some firms say they pay in 30 days but they mean 30 days after the end of the month in which your invoice has been submitted. If you weren’t told that at the beginning, you may think the payment is overdue, but the customer may not. It’s always hard to establish when a payment is overdue if there’s nothing in writing and you haven’t been told, and agreed to, the exact date the money will reach your account. Try to reach an agreement that you can live with.
If the payment really is overdue, you can charge interest on the amount of money owed.
Preserve the working relationship, but not at all costs. No one wants to risk damaging a working relationship with a customer in case they miss out on future work. For that reason, many people don’t chase up invoices and don’t charge interest. However, your business may be at risk if you don’t chase up payments due and there may be a reasonable explanation for the delay. It’s also possible that your invoice has got lost in the system. Most customers are happy to put things right when they realise there’s a problem. They need your goods and services and without them they may find it difficult to find another supplier who can deliver to the standard you can.
Legal action? If, despite several attempts there’s no payment forthcoming, you are still owed your money. The ultimate step is to take legal action. Many people feel that having to take a customer to the courts is a sign that there’s no protection, but the right to take a case to court is part of the protection scheme.
However, there is a step to try in between. Contact our office at the OSBC. The best option is to email us and as long as the complaint is in our remit, we may be able to help you by negotiating on your behalf. We do find that small business owners are reluctant to name the customers who aren’t paying or are late with their payments. Invariably this is down to concern that the working relationship will be damaged. However sometimes just telling the customer that you’ve been in touch with us is enough to get your money paid.
If you do consent to us intervening, we find we can, in the vast majority of cases, get you your money. We are always very mindful to make sure as far as possible to protect the working relationship for the future. We also have an interest rate calculator you can use to work out how much interest you can change for late payments, and information to help you resolve your dispute yourself if you prefer.