The impact of Brexit on small businesses: How to get paid on time

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In the UK, a number of industry figures have accused the Treasury of “ignoring the plight of small business under a no-deal Brexit”.

Whatever unfolds in the coming months, it’s likely that small businesses will face tighter margins.

It’s not easy to predict how the various outcomes might affect you. But there are steps you can take today to safeguard your business.

We recently talked about the ways you can create a healthier cash flow, and in the second of a series of articles on the impact of Brexit on SMBs, we look at the ways that businesses can ensure they get paid on time.

Despite efforts made to combat the issue of late payments, we know that it’s an area that still keeps small business owners up at night. Give yourself the best possible chance of being paid on time by sticking to these tried and tested tips.

Set the terms

When creating contracts for your clients, it’s important to check what payment terms you have agreed to with your own suppliers. For example, you don’t want to agree to pay an invoice within 30 days if you’ve agreed on a 60-day payment period with your own clients.

It’s also good to set terms based on what you know about your clients. If you have a repeat late payment offender on your books, you’re entitled to shorten your payment period to a fortnight or even a week (in fact, more than a third of businesses now request payment within a week).

Make it easy

If you make your payment terms easy, you’re more likely to be paid on time. Variety is the spice of life, so offer your clients a range of ways to pay, including processing card payments over the phone, in person and online. Our research shows you’ll get paid 20 days sooner if you offer credit card or an automated clearing house (like PayPal).

You also need to make sure that your invoice has all the information your client needs to make the payment, including a description of the work done, the date you did the work and any other requirements from the client. If you don’t cover all bases, you’re at risk of not getting paid. You don’t want to give them any reason for paying late.

Get organised

The fact of the matter is that the sooner you invoice, the sooner you can get paid. Clients will often wait to the due date to pay, so invoice everything promptly – ideally, as soon as the job is done. They’ll be more receptive to paying when they’ve just received the goods or services that you delivered, so capitalise on this goodwill. An efficient and regular invoicing process to keep track of expenses and what you’re owed in real-time will help you avoid late payments.

Build relationships

It’s easier to ask for payment (and chase it) if you know who is in the accounts department. It also means that they’ll see you as a real person, rather than a name in their inbox or on the top of an invoice.

If you can build this relationship, you’ll find it easier to send polite reminders about payment. Alternatively, accounting software like Xero can send automated invoice reminders so you don’t have to.

Investing in accounting software can help to take the hassle out of keeping on top of your finances by automating most of your time-consuming manual processes with increased accuracy.

The Government has published guidance on how businesses can prepare for Brexit which you can view here and check out the Enterprise Nation Brexit advice tool here.

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