Having a healthy cash flow is central to the survival of any business. While all practices will have established funding streams for NHS work, many also engage in other work that involves invoicing – and where there are invoices, there are late payers. Here are five ways you can ensure you avoid invoice hassles and receive the payments that you’re due
- Establish payment terms
We don’t like to talk about money – but sometimes, it’s necessary. Setting payment terms up-front is essential because it establishes to the client or customer what’s acceptable. Having this written down is especially important if you decide that you need to take things further in the future.
- Chasing is fine
Sadly, in business, chasing invoices is a necessary evil. Many people find it difficult or embarrassing to talk about money, but it’s your responsibility to communicate with the debtor. If you do need to chase up payment, do the following:
- Send a letter and a reminder. Take a note of the date this was sent and record it. Keep copies of all letters you send.
- Use the ‘phone and call the debtor. Sometimes speaking to someone can ensure that prompt payment is made. Record the dates and times of all calls too.
- Warn clients about charges
If you’re concerned that payment won’t be made, or are owed a substantial amount, it’s worth advising your debtor that you may apply charges to any outstanding debts. Government legislation allows you to charge 8% interest on any outstanding invoices. If payment isn’t made then you’re within your rights to approach a debt recovery agency, with that cost – which can stretch to thousands – being borne by the debtor. Sometimes, the warning is enough, but you can rest assured that the law is on your side.
- Don’t get emotional
It’s hard not to take things personally when dealing with debtors, but there may be many reasons why payment isn’t forthcoming. It’s difficult not to become emotionally involved, but chasing up debtors is about following a process. If you find yourself becoming emotionally involved while chasing a debt, ask a colleague for help and support or consider sharing the responsibility with others.
- Be prepared to take action
After a period of time, if payment isn’t made, you may need to consider more drastic action such as taking legal action. In the past this process could be time-consuming and expensive; however, the Money Claim Centre makes it easy to chase up debts of less than £100,000. The system enables you to start court proceedings online, with fees starting from just £25. Any fees incurred during the claim process will be automatically recovered from the debtor in the event that your claim is successful.
Once you have completed your claim the debtor will receive a request from the court for payment. If they refuse to pay they could receive a County Court Judgement, which could severely affect their future ability to access credit and, in some cases, operate a business.
Thankfully, the majority of claims are settled before they ever get to court.