Start as you mean to go on.
The joy and relief of winning new business can sometimes stop us from thinking about how and when we are going to be paid for it. If you don’t get payment terms hammered out and agreed before you do the work you could be in for a shock when the customer doesn’t pay when you’re expecting them to.
A Written Contract
Any business deal of a reasonable amount should have a written contract signed by both parties before work commences. You can download example contracts from various websites and tailor them to your own business.
A contract should state how much is payable and when at the very least, but there will be other aspects that need to be considered before either side signs on the dotted line. Particularly when services are involved, you should be clear in writing what you will provide. Also be clear about the responsibilities of the other party to the contract.
Every business sector has its own specialist terms in these contracts. Shouldn’t you be using them too?
If you had to go to court to recover the money from your customer, a contract signed by both parties would be a very good document to start you off. Without it, it’s their word against yours and that’s a much more difficult situation.
Six Action Points To Help Your Cashflow
- Investigate contracts used by others in your field to remind yourself what’s usual in your sector.
- What about insisting on stage payments throughout the contract to ease your cashflow?
- Think about problems you may have when dealing with your customer and how they can be overcome.
- Consider paying a one off fee for a commercial solicitor to check your contract wording so you can use the same basic one regularly.
- Think about ways of ensuring the customer pays your invoice on time.
- What action do you plan to take if the payment isn’t received on time?
If you need some help with making sure you get paid, or tax help and advice, call me on 01737 559211. We specialise in small business tax and accountancy.