Avoid “Invoice Rejected” – 9 Tactics for Getting Paid On Time by Your Big Customers
Landing a contract with a big company is the stuff of dreams for many Small Business owners. At long last, there is a regular income from a big customer, and there is usually a quantum leap in turnover to go with it.
What’s not to like?
But there are several things to be aware of, and common traps to avoid. Heeding these can save you a world of pain down the track – not to mention a whole bunch of cash.
Specifically, you will have to give some real consideration to the effect on your cash flow, and we all know that cash flow is one of the most critical issues for Small Business.
For the most part, big organisations are good at paying their bills, and default rates are very small. If the work is going along nicely as per the contract, and you have mastered their invoicing process, all will be well and you will get your payment on time. Or at least 99% of the time anyway.
1. LENGTH OF TIME TO PAYMENT
Payment terms are often non-negotiable, and you just will have to accept them. Often this is 60 – 90 days – some as long as 120 days – so you will have to factor this into your cash flow. Remember, that you will be receiving larger amounts of money now, so a chat with your bank manager may be required.
2. PAYMENT ON APPROVAL OF INVOICE
In an extra twist, many big businesses will have their payment terms as “x days from approval of invoice”. If the approval is delayed (someone’s gone on leave for instance), the count down for payment doesn’t start until it is actually approved.
3. CHANGES IN PAYMENT TERMS
It is not unusual for large companies to unilaterally change their payment terms, and there is absolutely nothing you can do about it. Check your contract, and stay on friendly terms with your bank!
4. GETTING THE DETAILS CORRECT
There is a special place in hyperspace reserved for invoices that fall foul of the corporate accounts payable system. Once your invoice disappears into that black hole, you may never get it back. So, make sure you are clear on EXACTLY what they want – and how they want it set out – right down to the last detail. This sounds trivial, but if you’re waiting for a payment that has lots of zeros at the end, you’ll regret not doing your homework.
5. PHONE A FRIEND
If your invoice disappears into that invoice black hole, you’re going to need some help to get it back. One of your first tasks once the contract is signed, is to locate an ally in Accounts Payable or Administration, and be very nice to them.
6. SYSTEMISE THE INVOICING FUNCTION
Following a set procedure for every invoice means they will be sent out accurately and on time, and that overdue payments are followed up – every time. This is one of the 3 major issues that big businesses have with SME’s – that they don’t have proper systems.
7. INVOICE IMMEDIATELY
It sounds obvious, but you’d be surprised how many Small Business owners delay invoicing because they’re too busy “on the tools”. This actually creates havoc for your big customer – they’ve already set aside the funds to pay you so their cash flow projections go haywire, and it annoys them intensely.
8. CHASE LATE PAYMENTS – IMMEDIATELY
This should be part of your documented invoicing system, and done immediately an invoice is overdue. If you don’t like doing this yourself – outsource it. Your job is to get your cash into your bank as soon as possible.
9. NO PAY, NO WORK
This takes some courage – to phone your contact in a giant corporation and tell them that you can’t do any more work because their invoice is overdue. It’s real lump-in-the-throat stuff, but it has to be done. If your corporate contact can’t rely on your good work to help them meet their own KPI’s, they’ll soon pitch in to help you get your payment.
Having a lovely large contract with a big company is of no use at all if you can’t get paid. Find out what they want, follow the guidelines, and enjoy the rewards of your new profit centre.
“The opinions expressed by Smallville Contributors are their own, not those of www.smallville.com.au"
SHARE THIS ARTICLE WITH LIKE MINDED SMALL BUSINESS PEOPLE