Draw up payment termsFirst things first: make your payment terms known loud and clear. Your payment terms are the conditions that you impose on your customers to make sure that you receive payment within an acceptable timeframe. Before you start working with a client, draw up a brief summary of these terms, and ask them to sign it. As well as laying down your payment deadline (e.g. 30 days after invoicing), you might want to request a deposit in order to secure some of the cash up front. You can also pre-emptively guard against being paid late by introducing a late payment penalty into your terms. You can legally charge?eight per cent interestplus the Bank of England base rate on invoices that are over 30 days late, and you’re also entitled to?claim debt recovery costsof up to 100 for the inconvenience. Having a written agreement in place makes everything clear right from the beginning, and can give you a cast-iron comeback against any flimsy excuses.
Have a watertight invoiceIf your invoices are missing information, then you’re giving your clients an opportunity to take advantage. it’s vital that you list your full business details, plus a rundown of the work completed and a clear cost breakdown in your invoices. Be sure to include any late payment penalties, and if you like, you could even include your full payment terms on every invoice. Do you use services like PayPal, GoCardless or Stripe? Make your invoices even slicker by adding an instant payment link, so making that payment couldnt be any easier. For more ways to make sure your invoices are untouchable, check out these tips to make sure it stands up to client questions.
Be firm (but friendly)Relationships with clients can often be a little tricky, requiring you to constantly toe the line between being friendly, yet professional. However, if you want to keep things sweet between you, then it’s crucial that you be assertive and upfront about your payment terms. Part of taking a firm hand could be requesting immediate payment for any work done. Our research has shown that?small business owners who issue zero-day terms, often get paid far quicker than their more lenient counterparts. Send a prompt, professional invoice and youll be off to a flying start. Once you’ve sent that invoice out, don’t be afraid to chase your client up. Be firm yet friendly, and remember – you’re only asking for something that is rightfully yours!
Fight for your rightsIf, despite all your best efforts, you still can’t get a client to cough up, you are well within your rights to take legal action. Whether it’s taking your case to small claims court, referring the matter to a debt collection agency or even getting a solicitor involved, you have lots of options to help claim what is rightfully yours. Check out our?comprehensive guideon options for UK-based small business owners faced with this situation. Emily Coltman FCA is chief accountant to FreeAgent, maker of award-winning cloud accounting software for freelancers, micro-businesses and their accountants Why unfair payment termsare the real scandal
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