Pulling on the golden thread

Payments. They’re the golden thread that runs through all businesses

Pulling on the golden thread

No matter how you cut it, if you don’t get paid for the work you do, you will eventually run out of money and fold. You can borrow, opt for invoice financing, stick any number of plasters over the gaping hole where your payments ought to be, but at some point, those sources of money will dry up leaving you looking into the abyss. Why then are businesses more worried about inflation, interest rates, energy bills, skills and labour shortages (all of which are very worrying) than about getting paid? 

Not getting paid means you can’t pay those bills, keep employees, hire the skills you need to grow, invest. Being paid must be the priority. Yet many small business owners will do almost anything, including borrowing money, on which they have to pay high interest, rather than take steps to get in money owed. 

Why are we so reluctant to chase up payments that are due? I’ve been slow to invoice, with a poor grasp on what’s owed, what’s been paid, how much is due. I’ve lost money. The longer I’ve waited the harder it’s been to chase payments because I hate talking about money. I’m not alone.

If you’re unwilling to lift the phone and ask when your invoice will be paid, and feel that it’s better to just let it go than antagonise your customers and risk losing future work, let someone or something else do the job for you. 

Help is available from apps and accountants, bookkeepers and software packages. 

You may worry that a third person conversing with your customers and trying to extract payment will upset the apple cart further. Or that some kind of intervention will cost so much as to render chasing the payment pointless in cash terms. However, if you don’t get paid you aren’t running a business but filling your time with a unlucrative hobby so let someone else follow the golden thread for you. That way there will be less heat and emotion involved. The Office of the Small Business Commissioner (OSBC) is here to help if you have got to the point where you have tried and failed to get paid and are in dispute with your customer. However, with the right processes in place it shouldn’t get to dispute stage. 

If you don’t want to involve another person, go digital. Check out the apps and packages available and find the right one for you, which your customers are happy to work with. Estimates vary about the amount of time going digital saves but if one small business I’ve talked to is right you could save half a day a week. That’s a lot of time freed up for planning and wooing new customers. 

Communication is key. Learn to talk about money before you take on work. Put your processes in place and make sure your customers know what they are. Set your own payment terms and tell customers what they are. They may want to impose their own but then you can negotiate. Don’t just roll over. You need to be paid quickly and you need to talk about it. The communication works both ways. Ask: what information does each customer need on the invoice to make sure it is payable? Give yourself the best chance to get paid in full on time and quickly.    

When we at the OSBC are asked to help resolve payment disputes, we often find that the root of the problem is poor communication because we’re bad at talking about money. There’s often no intention to pay late. Sometimes the invoices aren’t payable because of missing information and sometimes the customer’s processes are complicated and the invoice is sitting somewhere in the system, unpaid, waiting for the supplier to call asking where the money is. 

Let’s get better at talking about money as part of the whole business relationship and then we won’t need to pull on the golden thread because the due payments will come flowing in. 

Liz Barclay
Liz Barclay

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