By Charlotte Beugge Run your business Making sure your invoices are paid 3 Dec 2018 You’ve finished the job. Your client is pleased with your work. So you send in your invoice and wait for payment. And you carry on waiting. Late payments are an issue for more than half of Britain’s small and medium sized businesses according to the Zurich SME Risk Index, with the total owed more than £225 billion. So how do you chase late invoices? Can technology help? And how can you prevent tardy payments in the future? Get it right the first time Are your invoices actually doing you a dis-service? The information on your invoice could determine whether you are paid on time. Your company name should be on the masthead with your address. You must include your correct banking details (including the IBAN code if your client is overseas) or provide a link to your PayPal account or similar. Say if you don’t accept cheques or cash. You must also give your invoice a unique sequential number. If your business is a limited company then you must put your Companies House registered number and address on the invoice too. If you’re VAT registered there are more rules. Emily Coltman FCA, chief accountant at FreeAgent, an online accounting system for freelancers and small businesses said: “The guidance from HMRC is that if you are VAT registered there are key details which must be included on your invoice including your VAT registration number, the tax point (the time of supply) and a description of the goods or services supplied. You will also need to show the unit price or rate of VAT for each item on the invoice.” However good your invoice is, it’s going to be delayed or unpaid if you aren’t sending it to the right person. This may not be the individual who commissioned you. And don’t just send the invoice to the accounts department if possible. Get a name of the right person. Then you have a point of contact if there are problems getting paid. You absolutely must agree in advance with your customer your payment terms In your own interest? There’s another important thing to include on your invoice: your payment terms. You should include on your invoice how long you expect to wait before you’re paid. However, this shouldn’t come as a surprise to your client as you must discuss it when you agree to take on the work. Coltman adds: “You absolutely must agree in advance with your customer your payment terms, otherwise you are leaving yourself open to the risk of late payment. Putting on your invoice that you expect payment within a set number of days without agreeing this in advance is not conducive to a good relationship with your client.” And you also need to state clearly if you’re going to charge interest for late payments: again, you should have discussed this in advance of the invoice. Government guidance is that if you don’t agree a payment date with your client then the payment is deemed late 30 days after either the customer gets the invoice or when you deliver the goods or services if this is later. It also states that you can charge ‘statutory interest’ at 8% plus base rate (currently 0.75%) unless you’ve already agreed a rate of interest and put this on your invoice. Should you think about charging for late payment? Again, unless you have told your client in advance of the invoice that you’re accepting the business based on your terms and conditions which include charging interest for late payment, then it’s not necessarily a good idea as it can appear aggressive. And it may hinder your chances of picking up future work from that client. However, you may decide that a client you’ve had to chase again and again for payment may not be one you want to hang onto anyway. In future, if you’re concerned about a new client and whether it will pay your invoices, consider doing a credit check on them first. The chase So what happens if your invoice is still unpaid? You could phone up and ask for payment but some may find that hard. “I think difficultly talking about money is a very British thing” says Coltman. You could use a virtual assistant and ask them to chase payment for you. Or you could sign up to an online service such as FreeAgent, ClearBooks or Easy Invoicing. These do your invoicing – and start chasing them when they are due. Coltman says, “Our research shows that our users find being able to track and send invoices through our software really useful – and productive.” If you really can’t get payment, even after re-sending invoices and imposing penalties, then your last resort may be to bring in the lawyers or companies which will pursue the debt for you. Such actions really must be as a last resort: hopefully, if you get your invoicing systems up to scratch then it won’t come to this. And do remember when you’re chasing for money that it really could be an honest mistake: don’t assume the worst. Most people are honourable and pay up in the end. Charlotte Beugge spent more than 20 years as the deputy personal finance editor on The Daily Telegraph and then The Daily Mail. A freelancer since 2010, her work has appeared in national newspapers, magazines and websites.