In the world of a sole trader, few things are more important than making sure you get paid on time. When customers settle their accounts in a timely fashion, it keeps your cash flow going, and keeps your admin time (and costs!) as low as possible. We’ve put together 7 things you can do to keep your customers paying on time..

1. Develop a clear and concise credit control system from the very beginning. Set a process that you stick to without fail. Start with your payment terms. What are they? They don’t have to be 30 days! We have seen increasing numbers of sole traders setting 7 day payment terms. This isn’t unreasonable, and also keeps your bill at the forefront of your customers mind, as they don’t have almost a month to forget about it.
2. When you take on a new client, or receive an order from a new customer, make your settlement terms crystal clear. When processing any orders or agreeing to any work – always be upfront and direct about your payment terms. Include them in your terms of agreements, and make sure they are obvious on your invoices. Additionally, send your invoice as quickly as possible! No one likes to receive an invoice weeks after the work has been done. Try to invoice on the day, or the day after, to keep the process as smooth as possible.

3. How do your customers pay you? You don’t need to be sitting around waiting for cheques to arrive in the post! Payments can be made in a variety of ways – make sure your bank details are clearly marked on your invoice for BACS payments, and look at other options like GoCardless which enables you to take one off or recurring payments online.

4. If late payments are getting increasingly frequent, consider offering a 5% settlement discount, for payments made within 5 days of the invoice date. This doesn’t work for everyone, but clients that have applied this strategy have noticed an improvement in customer payments. Everyone loves a discount!

5. Consider what you will do in the event of someone not paying. Do you have a plan? If your invoice is due 7 days after issuing, call on the 7th day with a polite reminder. If the customer still hasn’t paid the next day, call them again. Most people don’t set out to ‘not pay’ – we are all busy, and of course we understand that bill paying slips many people’s minds. If your initial calls do not result in a payment, send the customer a statement and an email. If payment doesn’t appear over a week after it has fallen due, think about what line of work you are in – is it social media account management? Inform them that their account will be put on hold, and you will be unable to work on their behalf until their account is settled. If you supply products, consider asking for payment in full before you dispatch them, or a 50% payment upfront. Make these points clear in your ‘terms and conditions’ too.

6. Don’t extend credit to late paying customers! If the customer has paid you later than your terms previously, ask for payment up front next time. Do not continue to do work or supply products to people that do not pay you on time, it isn’t cost effective for you.

7. Finally, think about using software that incorporates a basic credit control system, particularly if you have a few customers. If you forget to chase people, or leave invoices outstanding for too long, credit control becomes a pain. There are many different options out there for internal credit control, but our favourite is Xero. Simply add your customer invoices and keep an eye on your sales chart on the main dashboard to see what’s due and when. The program also emails invoices, statements and reminders directly to your customers for, what’s not to like about that?!

If you need any assistance with your credit control, or advice on which system might work for you, we will be happy to help as much as we can. Do get in touch if you would like any further information at:

Happy Bookkeeping!