How to get paid when contracting
The credit control/debt recovery process is a long-winded and sometimes complicated one, and with contracting, as in any other business venture, continued turnover and constant cash flow dictates whether your Limited Company succeeds or fails.
The downside of contracting is that the joy of obtaining your hard-earned cash can sometimes turn to despair when you realise that it has taken almost 6 months to obtain payment and the value of your original invoice has dissipated to a shadow of its former value.
Whilst there are no quick fixes to the debt recovery process, there are certain actions that you can take to ensure consistent results whatever your business type and/or debtor and make the process of "Getting Paid" an altogether less stressful one.
1. Don't panic! Most clients will need a little reminder in order to pay your invoice. How many times do you pay on an initial invoice without a reminder? Well your clients are just the same.
2. Establish contact with your client. A friendly letter/phone call/fax/email can do wonders and assists greatly in ensuring your client is still trading.
3. Keep your contact database updated Check the contact details of your client. Many suppliers have been shocked to find that the client or contact person that they have been writing to for the last six months and receiving no response from has either ceased trading or moved to new premises.
4. Is the invoice correct? There is no point in you harassing your client when the invoice you have raised is incorrect. Furthermore, does your client require invoices in a particular format and if so has this been done? Many clients have systems that do not allow them to part-pay invoices. Therefore, if you want your invoice paid you will need to raise a credit note in order that your invoice can pass through their payment system.
5. Do you have a legally binding agreement with your client? Many client-supplier relationships have been based on years of trading as opposed to any formal or written agreement. A Contract, Purchase Order, Schedule of Works, Letter of Intent and signed Terms of Business, are all great foundations in establishing a business relationship between supplier and client.
6. Have there been any complaints? Most clients will not pay for an unsatisfactory service. If you have the type of client that will pay regardless of the quality of work, then you are fortunate. However complaints usually mean non-payment. Also, do you have a complaints procedure on-board to deal with instances where disputes arise? Has it been quality assessed? A swift investigation and speedy resolution of a client's complaint can pay dividends in quick settlement and ongoing business.
7. Do you have copies of your Evidence? That's right can you actually prove that your debt is genuinely owed, should it get as far as the District Judge in the County Court? Do you have timesheets, invoices, receipts of delivery, for goods/services that you claim to have delivered? If not, this may be a good time to start thinking of the alternative means by which you may settle your dispute.
8. Do you have witnesses? Who can appear in the County Court to give evidence on your behalf if the matter cannot be resolved amicably? Are those witnesses credible and reliable?
9. Are you prepared to compromise? Sometimes the possibility of doing business in the future can be offset against losing a small amount on an invoice. Invariably many businesses are "offended" by the use of legal proceedings and may choose not to do business with you again. Compromise can help avoid this situation.
10. Get proper legal advice. Don't allow personal feelings to cloud your judgment in respect of litigation - this can be stressful, time-consuming and expensive if handled badly. Make sure you have instructed a Legal Advisor or Debt Recovery Specialist before launching legal proceedings.
Article kindly provided by Clayton M Coke, PRMS
www.prmsltd.co.uk
Editor's Note: You can download our free invoice template here.
