By David Kitchenham Friday, 18th March 2022 0 Comments Get Paid – Like a Boss. Killer Tips on Getting Paid on time every time RUNNING any business is full of challenges and hurdles, but ultimately for a worthy reward – probably the most important of which is making money, generating a profit, remaining solvent. But even the most seasoned business owner will have noticed that getting paid is not always easy and it is becoming increasingly difficult, especially in the construction industry. The Do’s & Don’ts of making sure you get paid Gary Ainley – He’s an expert in getting people to pay up… DO make sure you understand the legal entity of a new customer’s business and who within the business is responsible for making payments to you. Should an invoice remain unpaid, the legal entity (e.g. a sole trader, a limited company or a partnership) will make a difference to how the debt can be recovered or if it is even worth attempting to recover it. DO credit check all new customers before you agree to supply to them. Companies in financial difficulties will often try to find new suppliers so they can continue to trade in the hope that they can turn their situation around, but they’re unlikely to volunteer this information. DO make sure you get your customer to sign a contract and that you have adequate and legally binding Terms & Conditions (T&Cs) drawn up by a solicitor, detailing your payment terms and credit control procedure. Your T&Cs will ensure you have something concrete to fall back on should a customer forfeit their part of the contract. DO ask your customer to give you a signed authorisation for each new order or job you do for them, and obtain proof of delivery if you are sending goods to them. It might sound obvious, but that extra step in your sales process could be vital if your customer doesn’t pay you. DO take action as soon as a debt becomes overdue. Always follow your credit control procedure. Start with a gentle, polite reminder (they might genuinely have overlooked payment), but follow it through. It may be possible to agree an acceptable payment plan, but put this in writing and get the customer to sign it. DON’T continue to supply a customer who is already overdue. You cannot be sure of their financial situation – it may have changed since your initial credit check. If a customer has outstanding invoices, put them on ‘stop’. As a fellow business owner, they should understand and respect your position. If they do settle the outstanding amount, keep a close eye on them – it may have been a one-off or it may be a symptom of longer-term financial difficulty. And if you do find yourself in the unfortunate position of not being paid : DO employ the services of a reputable debt collection company as soon as a payment is not made by the agreed date. It is often those who chase the debts the earliest that will receive full payment. The earlier a debt is sent for recovery, the more chance there is it will be paid. Once excellent customers who always paid on time, every time, have started to push payment dates to the max. Some simply don’t have the cashflow they once did, some are hanging on to their business by a thread. But you’ve built up a relationship with them, so you want to help. You allow them to extend payment dates, and you accept another order from them, even though they still owe you for the previous one. You don’t want to chase them for money – it would be uncomfortable for both of you. But running a successful business means that you sometimes have to get comfortable with the uncomfortable. When you don’t get paid you might not be able to buy the materials needed for the next job or pay your staff. It affects your ability to run your business and it can have dire consequences. We hear about companies going into administration all the time these days. It’s nothing new, but it does appear to be a growing problem – the number of construction firms going into administration in February this year was at its highest level in two years (Creditsafe). This can have huge consequences for creditors. Once a customer files a notice of intent to appoint administrators, you’ve lost your chance to make sure you get paid and, by the time media reports surface about a firm going into administration, it is too late. If only you’d heeded the warning signs and acted faster! “If you suspect that a customer is heading towards problems, acting quickly and calling in the experts will give you a much better chance of getting paid. We’re getting a lot more instances of firms in the construction industry being late with payments”Gary Ainley, Director at debt collection agency Expert Collections, Not being paid causes you stress and problems with your own cashflow and can cripple your business, so being ahead of the game is important. “Analysing the company owing money helps us decide on a strategy for the best way to proceed on an individual basis. For example, a business may have a recent track record of only making payment at the point of legal action, so we’ll treat this differently and act accordingly. It’s not about going in heavy handed, it’s about gathering the facts and getting the best and quickest solution for our client.” But it doesn’t have to be this way. Prevention is better than cure and there are ways to avoid having to call in the services of a debt collection agency. Making sure you get paid is vital, so taking a few preventive measures will help to avoid those uncomfortable situations and ensure you get paid every time, on time, by every customer. If you have read this far and have something to say about business cash flow or similar. Comment below or have a say on our LinkedIn page for other people to marvel at your valuable opinion. Like what you see all the same and you’ll get to see more incredible business advice like this. Post navigation Previous Post Redtronic launches the new vertical Infinity NV6 directional LED Next Post Draper’s D20 brushless circular saw – Making the cut David Kitchenham Tool loving geek and tech head from PAL Media. Leave a Comment Cancel replyYou must be logged in to post a comment.