Businesses scrutinising every penny on invoices received – will this be the trend?

Businesses are quite rightly querying every pound and penny when receiving invoices from other providers for work done. Will this create a difficult time for service providers being required to document and record every minute, half hour spent on services/work provided, keeping rigid and strict records?

Taken from Bytestart.co.uk – The Small Business Portel - research released by Bibby Financial Services, shows that 2.38 million (53%) of UK business owners or managers are stalling payments to other parties in a bid to bridge the late payment gap. With 12 per cent of these businesses spending three days or more per month to recover payments, the potential cost to the economy is huge. Late payments could be causing a ripple effect on over half the businesses in the UK, according to new figures. The total cost of delayed settlement could be costing them up to £2bn per year. Research reveals 52% of UK business owners are spending more time this year chasing late payments than last year, costing vital time and money at a crucial stage for the UK economy.

Recent experience with a client taught us an extremely valuable lesson never to take people/businesses for granted. Always, always keep a good record of work produced with a breakdown of time spent, description of task and cost allocated ready to be invoiced.

If you can show a detailed accurate account of your time taken to complete a piece of work, does the client still have a right to refuse to pay? This is a question which needs to be addressed as this creates a continuous backwards and forwards never ending late payment chasing process which leads to unnecessary stress and time wasting.

Do not under any circumstance become complacent about receiving payments from clients/customers if they go over the agreed payment terms. Why should the money be allowed to sit in their bank making interest when it should be sat in yours? Even a long term client can hit money problems whereby they’re unable to pay their next invoice, even though previous to this time period issues around finance has never risen.

Gut instinct is there for a reason so use it! Should you have any suspicion or reason to think that a client might be facing financial problems then send them a brief run down on the number of hour’s work you’ve done so far. This will give them ample opportunity to speak up and say whether they require any more work to continue as normal or the option to pull back and say no.

A good working practice to adopt when taking on a new client is to provide only 2 hours support at the very beginning. This allows the client to see your work and what can be achieved in that time scale, plus, gives you confirmation that the client can pay when invoiced after those first 2 hours of work within your agreed payment terms.

Building good working relationships with clients is always an important part of running a business, getting paid is massively essential as to whether your continue to trade.