One, if not the essential element to running a successful small business is business finance and cash flow. I’m often flabbergasted by the number of sole-traders and freelancers who contact me requesting information on my bookkeeping service, who cannot tell me within a few minutes how much money they are owed, and in some cases have no idea what their payment terms are – due to the fact that they haven’t set any! To ensure that your business becomes cash happy and the cash is flowing. Put in place very easy business finance procedures and follow the basic steps below.
Payment terms
Agree and confirm clear payment terms with your customers. You can do this easily by entering your payment terms in your Contract or Terms & Conditions, also, always make sure that your payment terms are displayed on your invoice. If you don’t know when are you expecting to get paid for the work you’ve completed, how are your customers going to know?
I recently changed my payment terms from 14 to 7 days. I made sure that my clients’ were aware well in advance of the change in terms. Making it a smooth transition. Detailing payment terms on an invoice is a legal requirement. You have to inform your clients, how much they have to pay you and when they have to pay you. So:
Set clear invoicing dates
Some businesses invoice immediately as soon as the work is completed. Others prefer to invoice on set dates. It’s completely up to you how you want to do it. Just make it consistent, and once again, let your customers know in advance.
When deciding this for yourself take into account that the payment may not arrive in your account until the final day of your payment terms.
As the majority of my clients’ are retained monthly, I invoice at month end, and as I’ve also set my payment terms, I know when all invoices will be settled and the payment is in my bank.
Make payment easy for your clients
It’s a definite must to provide bank details on the invoice you send to your customers. Don’t send them on a hunt for your bank account details, which means wasting their time. Make it easy. You can also make it even easier by setting up online payment options such as Paypal, Sage Pay or Go Cardless. All of which are very easy to set up and manage, your customers will love the easy, hassle free option.
Offer regular Customers Fixed Pay Retainer Packages
I have a few retained customers who have set up DD/Standing order payments. Neither them nor I have to think about payment, as on the day I invoice payment is in my business bank account.
