Here We Go Again
We self-employed types hear some whoppers over the years don’t we?
- “Invoice? What invoice…?”
- “We’ve already paid you!”
- “Our accounts lady only comes in on Thursday mornings.”
- “We haven’t had what’s on this invoice!”
- “Our accounts person has left. You’ll have to wait.”
- “We’ll pay you the month after next.”
My Approach to Late Payers
I’ve worked for myself since 2017. I’ve only ever not been paid once. It was partly my fault, partly the customers. I just learnt my lesson and moved on.
I’m writing this as I personally know quite a few self-employed people and often they’ll moan that they’re owed money. Quite often it’ll turn out they not bothering with one or more of the steps below. If this post helps, let me know!
Make sure to get a purchase order!
Step 1. Get a PO, before you do the job / sell whatever you sell. It’s amazing how many self employed people are lax on this. No business is going to be offended or surprised when you say:
“Ok, great. If you can email me a PO across, I’ll get that booked in.”
I do this for every job.
Have Terms & Conditions with your payment terms clearly stated (and agreed to)
When I get a new customer, I set them up on my system. Part of that is having them complete my New Customer Form with their company / accounts details. The second page of that PDF is my terms with a checkbox indicating they agree to those terms. The customer completes it and emails it back. So if there’s a dispute, sorry, you agreed to my terms.
Make it easy to get paid on time
When I first started working for myself, I used 30 day terms. I found that quickly got difficult to manage. Let’s say I do a job on the 15th of January. I’d put the due date as 15th February on my invoice. The thing is, most businesses (in my experience) pay and get paid at the end of each month. So I switched to net monthly which means all invoices are payable at the end of the month after invoice date.
So, the job I just mentioned that I invoice on 15th January would be due on 28th February. As would a job on 1st January or 31st January. I have one due date each month. Easier for me, easier for my customers.
Send invoices ASAP
It seems an obvious thing, but are you sending your invoices out promptly? I got into the habit of making it a rule to send invoices on the same day as I finish a job.
Have a robust invoicing system
Again, when I first started on my own, I had no system to keep track of my invoices. I’d just check my sent emails and check those against bank payments. Needless to say, that caused some issues so I wrote my own invoicing software. Even a spreadsheet is better than nothing.
Send reminders (and CC yourself)
I send an email summary of all open invoices to each customer in the last week of each month. I also have a copy sent to me. The reason I started cc’ing myself was when I got “no, I’m looking at my inbox now, and your invoice is not there”. Now, when that happens, I just forward it from my phone. If I’ve got overdue invoices, I send out the same email on the 1st of the month. This time I highlight that there are overdue invoices.
Weed out the worst offenders
Again, I have a simple but effective system. If I’m owed money by a customer and they phone or email about another job, I’ll just tell them that they’re on stop. It’s a lot simpler to just pay me than try and find another supplier (who might insist on proforma payment anyway). It won’t magically turn them into a prompt payer, but at least you’ll get what’s currently owed.
If they continue to misbehave, I’ll move them to proforma (upfront) payment.
Don’t take it personally
I’ve not figured out exactly why some companies pay late. I’m sure some of it is cashflow issues, but a lot of it I think is purely because they can’t be arsed. They’ll almost certainly be paying other companies late too. Don’t get worked up, instead improve your system.
Summary
- Always get a purchase order
- Payment terms agreed to by customer
- Invoice net monthly
- Ensure invoicing system is robust
- Send invoices promptly
- Send reminders consistently
- Ditch the worst payers when you can
Updates
2025-01-05: Add Summary
