Ask the experts: Minimising the effect of late payments

Industries 
Rosemary Bookkeeping provide all their franchisees with a proven business method as well as top training and support to ensure their success.
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Rosemary Bookkeeping

  Opportunities:
In the UK
  Business Type:
Franchise
  Minimum Investment:
£5,091
  Training Provided:
Yes
  Home-based:
Yes
  Part time:
  BFA Membership:
Member - Associate

With Christmas fast approaching, the key challenge faced by many small businesses is late payments from their clients. Late payments is an extremely common problem, with 85% of SMEs being affected. Many small businesses are turning to outsourced bookkeepers to help them keep their books in order and minimise the effect of these late payments on their businesses. Figures published by Bacs Payment Schemes suggest that most SMEs are owed in the region of £39.4 billion by their clients.

Late payments have a knock-on effect that contributes massively to negative cash flow. Poor cash flow is one of the biggest killers of small businesses. How can small businesses minimise the effects of these late payments? Rosemary Bookkeeping have been sharing their five top tips:

1. Chase late payments
As a small business, you may need to chase your clients for payment from time to time. If you’re waiting for an invoice and your emails haven’t been answered, you need to call them. It may be that the client has forgotten or it’s been missed by their accounts team. Don’t leave the invoice outstanding on your books if you need the payment and haven’t had any contact from your client. 

2. Make payment terms clear
Make it clear from the outset with your clients when you expect the invoice to be paid. You need to give them a deadline to help them fit the payment into their own cash flow. Ensure that your payment terms are included in your agreements and that they are displayed on your invoices to avoid any disputes further down the line.

3. Early payment discounts
Consider offering a small discount for early payments. Small businesses often find this to be an effective way of reducing late payments. By offering your clients an incentive, you help to improve the cash flow in your business and build a good relationship with your clients. If they know they’ll get a discount for paying early, they will always pay in a timely manner.

4. Be firm
Be firm with the clients who regularly fail to pay you on time. You’re under no obligation to extend credit to clients. You may even have to refuse to work with those clients who you know are unreliable.

5. Understand your clients
You may be able to reduce your late payment rates by getting to know your clients and how they operate. Building a professional and friendly rapport with clients is a great way to form relationships and encourage timely payments. If the client can see that there is a human presence associated with the invoice, they are more likely to pay on time.

Rosemary Bookkeeping franchisees are well placed to offer assistance to those small businesses who are affected by late payments. Franchisees know the best ways to get invoices paid on time in order to improve the cash flow within a business.

Rosemary Bookkeeping delivers intelligent bookkeeping services to SMEs, accountants and franchisors, ensuring a consistency of delivery and high-quality work. Their practical, down-to-earth and friendly approach provides clients with information that enables them to understand, make decisions on their businesses and gives peace of mind that HMRC will be happy, whilst charges are fair and reasonable.

The Rosemary Bookkeeping franchise now has over 20 nationwide offices operated by their franchise network, servicing the SME market of over four million businesses in the UK. The franchise is based on a unique business concept that has been established and refined since 2002, providing a bookkeeping system within a fully supported franchise package. Franchisees obtain huge flexibility with superb work-life balance.

For more information and to see if you qualify to attend the next Rosemary Bookkeeping™ Discovery Day, please fill out the form below. 

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