At the start of the new year, many of us will be setting resolutions and goals, both in our personal lives and for business. Here at the Office of the Small Business Commissioner, our resolution is to ensure that small businesses have access to the best quality guidance and services. So, we will be focusing on the fundamentals of small firms getting paid and each month releasing resources, tools, and guidance to help you secure good cashflow throughout the year.
For now, here are some of my top tips for getting paid quickly:
Negotiate terms
Negotiation is an important part of every business relationship, and most businesses expect it. Never take on work without fully understanding the terms and conditions, including payment terms.
Entrepreneurs often say “know your own worth” which gives you a starting point to come up with a figure, make the opening offer, and take control of the negotiation. If you are willing to accept less than that figure, it’s important that the client understands that the offer is unique to them and below your value.
See our website for further guidance.
Write a contract
Having a written contract is one of the most important tools you can use to protect yourself against late payments. Write down what’s been agreed so that both parties understand the terms and responsibilities of those involved. A business owner once said to me “contract for the marriage, not the divorce” – whatever your size, you’re an equal partner. Having a good contract makes that clear. Payment terms will be included in this document.
The OSBC recently released a guide on how to create a contract.
Check the invoice
As more businesses move towards e-invoicing, invoice typos and errors are becoming less of an issue, although I do know of one company who entered the wrong information to their payment system. This led to all invoices having an error, which resulted in chaos, confusion, and late payments!
Those issues are rare, but a mis-typed PO number or an invoice missing key information is surprisingly common. Good invoices include:
- Invoice date
- Invoice number
- Purchase order number (if you’ve been given one)
- The work completed that the invoice relates to
- Total fee (with details of VAT if applicable)
- Payment due date
- Payment terms, as agreed in the contract
- Bank account details
Establish communication
Communication is key. In all business relationships you need to establish clear lines of communication from the off. Remember the person commissioning the work may not be the one handling payments. Smaller businesses might have one person for both tasks, whereas larger businesses typically have separate processes. Make sure you are reaching out to the right person or department. If you are not sure, ask as early as possible. And if you don’t hear anything, chase it!
You can see advice on all the subjects mentioned above on the Small Business Commissioner website. And should you experience late payments, contact us here to see if we can help you.
