The late payment problem is a major issue in the manufacturing industry, and it can have devastating impacts on businesses.
Manufacturers are often faced with challenges with significant delays in payments after the product has been delivered.
This delays production of new orders, affects cash flow, and can even cause companies to go out of business. In fact, late payment of invoices causes around 50,000 UK SMEs to go out of business every year.
Simply having invoices paid on time could result in between £40-60 billion in additional revenue for small businesses, enhancing growth and supporting the UK economy.
To help manufacturers overcome this challenge, we've compiled six tips on how you can get paid on time!
The first step in getting paid on time is to set expectations with your client. Ensure that both parties understand what will be provided, how much it costs, and when payment is due before any work begins.
Ideally, you'll want to have these terms in writing and have both parties sign off on them. This will help to avoid any confusion or disputes down the road.
If the customer is asking for a change to the original scope of work, get it in writing and make sure both parties agree to the changes.
Once the scope of work is agreed upon, create a timeline for the project that outlines when each step will be completed. This will help you stay on track and ensure that payment is received as expected.
In order to ensure that your invoice is paid in a timely manner, it's important to make sure it's easy for your client to understand. Be sure to list all of the services you provided, along with the cost of each, as well as the date of payment.
You'll also want to make sure you send your invoice as soon as possible after the work is completed. Don't delay in sending an invoice if payment is due on completion of a project
When it comes to payment terms, be sure to be very clear about the due date. State specifically when payment is expected, and don't be afraid to enforce a late payment fee if it's not received by that time.
Send the invoice right away and be stringent with your payment terms
An effective credit control policy will help you to keep tabs on who owes you money when it's expected to be paid, and what action will be taken if payment isn't received.
Make sure you have a process in place for chasing payments as this will allow you to be more efficient when it comes to getting paid on time.
If someone doesn't pay their invoice on time, don't just sit back and hope they'll come around. Have a process in place to follow up with them, and constantly remind them of their outstanding invoices.
If you don't have a credit policy in place and aren't sure about what needs to be included in one, or just want to optimize the one you have, you can use our credit control policy template.
Credit checking is a vital tool to protect your business from bad debt, and it's something that you should be doing before entering into any business agreement.
You can use a credit checking service to get an idea of how risky a potential customer or supplier is, which will allow you to decide whether or not you want to work with them.
Many credit checking services offer a free trial, so it's worth checking out some of the options available and seeing which one works best for your business.
Chaser's credit checking feature allows you to quickly and easily find out if a potential customer is financially stable and trustworthy.
It's also important to stay on top of your client's account status. Make sure you are aware of any changes in their payment history so that you can take the appropriate action if needed.
Remember, credit checking is not a 'one and done' situation. You should always be monitoring your customers' creditworthiness and taking the necessary steps to protect your business.
The best way to get paid is to make it as easy to pay you as possible. Offering your customer multiple payment options, such as check, credit card, Switch, and PayPal will help you get paid faster.
Multiple payment options can also include payment plans. If a customer is unable to pay your invoice in full, you can work out a payment plan that splits the cost up over time. This will help ensure that you get paid without damaging your relationship with the customer.
Since great customer relationships are hugely important to small businesses, knowing when to say "yes" can help you avoid late payment problems.
You should always try to politely accommodate your customers' requests if it is reasonable and will not put too much strain on your business. If a customer wants an earlier due date or more lenient terms, for example, consider accommodating them as this may ensure that they pay on time in the future.
In some cases, it may be worth agreeing to a late payment fee or discount for early payment. This can incentivize customers to pay on time and can help you cover the costs of being paid late.
Getting invoices paid on time often means being proactive in chasing payments and this can start before the payment is even due.
Sending your customer an email to let them know about an upcoming payment and reaffirming your payment terms is a great way to remind them about your invoice and spur them into action.
If you do not get a response after the initial reminder, follow up with another email or phone call before the next scheduled update in their accounts payable system.
Getting paid late is often because there has been some sort of communication breakdown and by staying on top of your invoices you will be able to prevent this.
The only issue with proactively chasing invoices is that it takes time away from your day-to-day operations and if you are already stretched for time then this may not be an option.
The good news is that there are other options, automation for example, which can help you get paid on time without the need for constant manual follow-ups.
Chaser's innovative automated payment reminders are a great way to ensure that you get paid on time, every time.
They work by automatically emailing your customers when an invoice is due, and following up with them if payment isn't made on time.
This way you can rest assured that your invoices are being chased without the need for any additional effort from you.
Plus, Chaser's late payment reports will help you keep track of which customers are paying on time and which ones are falling behind.
If you're looking for a simple and effective way to get paid on time, Chaser's automated payment reminders could be the answer.
Late payments putting your business under pressure is never a pleasant experience, but it's one that can be overcome.
It is essential to keep your communication channels open with the customer while remaining persistent in following up on outstanding invoices.
This will help you get paid faster, limit future disputes and ultimately save you time and money.
If you're experiencing problems with late payments, don't be afraid to reach out to the customer and ask for payment. Be professional and polite, but make it clear that you need to be paid in a timely manner.
If a customer is having trouble paying their invoice on time, reach out to them and see if there's any way you can help. Maybe they need an extension or a payment plan. If you can work with them, they are more likely to stay loyal to your business in the future.
If you struggle to find the time to follow up on late invoices, Chaser's award-winning credit control platform is the perfect way to stay on top of everything.
You can set up alerts that will let you know when a late payment has been made and with Chaser's invoice reminders, there'll be no more customer excuses!
Find out more about how Chaser can help your business with our free trial!