Raising the BAR with paying suppliers in 30 days

Lichfield & Tamworth Chamber of Commerce

This article is part of the Greater Birmingham Chambers of Commerce’s Raise the BAR (Business Adaptability & Resilience) Campaign, sponsored by Western Union Business Solutions. For more campaign content click here. This campaign provides Chamber members with a platform to share learning and inspiration on this agenda. All views and opinions expressed below are those of the author only. 

By James Blackman, President, Lichfield & Tamworth Chamber of Commerce

With B-Day (Brexit) approaching in October it has never been more critical to make sure that your business is resilient. Taking steps to ensure you are paid promptly and, in turn, taking an ethical approach to paying your suppliers, is a key part of this. I and other advocates of the #Payin30days campaign continually preach that it doesn’t matter what size your business is – ensuring that your invoices are paid on time is critical.

At present £15 billion is owed to over 5.7 million small and midsized enterprises (SMEs) and this number is set to increase with Brexit looming. Ensuring all these SMEs were paid what they are owed would have a significant positive impact on the economy as a whole, as well as the individual businesses. 

So how to make your business adaptable and resilient to the effects of late payments and how to get round potential issues which could have a detrimental effect to your growth.

Make sure you dotted the “I” and crossed the “T”!

At the very outset make sure you have the right person to send the invoice too. Sounds like a no brainer but often you send it to the contact your dealing with daily. Then they tend to overlook the invoice as they’re busy doing other things.  Also make sure that you find out if you need to follow a procedure. Make it very clearly from day 1 when you expect to be paid and make it as clear as day within the contract and your terms and conditions. This then make it very clear when chasing.

Spreading the payments!

Feast and famine are often the biggest cause of stress and real cashflow problems. Where appropriate, try to get the bigger invoices split over 3,6,12 months. It makes the bigger invoices a little less hard to swallow. If for example your customer is waiting to get paid by their clients, they could easily stall the larger payments until they’ve got the cash in the bank.  You then also know that you have regular payments on time.

Automation is key!

Make sure your invoice system has the ability to setup a schedule easily via email. We have never sent out a paper invoice in 9 years. These days you don’t need to damage the environment to get paid. If you take Xero and Quick Books, they allow you send invoices via email and you can set up chasers at agreed milestones.   So on day, 14th-day,20th-day 25th-day,the Invoice Due date, 7 days after due date, 14 days after due date. 

On the invoices show clearly your bank details and also alternative ways to pay - for example, if you can allow credit card payments, Stripe, Paypal, Go Cardless etc… yes, they take a percentage of the invoice but once it paid it guaranteed funds. You also get alerted that the invoice has been paid.  Within Xero & Quick Books you can link up your bank account and create rules, so you can almost fire and forget about an invoice.  You can also then input these systems very quickly and see how much has been invoiced out, and also see your late payers.

Never take less for what you're owed.

Often larger companies will pay the invoices early if you offer a discount. Just say no! Why should you reduce the agreed price to get paid on time? It’s a very shady practice and doesn’t benefit any business.  It actually blind robbery. 

Process is the key

The key to ensuring that your cashflow is resilient you need to make sure you have a documented process on how to manage your cashflow. You need to stick to it rigorously.  Certainly, don’t think it is embarrassing to chase what is owed to you - at the end of the day you have provided your expertise and services to your client.  The Small Business Commissioners Office can be used to help you get paid and it’s a free service.  I would advise that you exhaust all avenues of chasing the bad debut before you speak to the Small Business Commissioner. 

The Lichfield & Tamworth Chamber of Commerce are focused on helping to get the message of paying suppliers within 30 days or the agreed contract. #Payin30days.