Business Accountant

Home » Getting Paid (Page 2)

Category Archives: Getting Paid

Is the UK doing enough to stop late payment?

Final demand concept.

Late payment kills businesses, it’s a fact.

Latest research shows that British SMEs are having to wait an average of 41 days longer than their original agreed payment terms before invoices are paid. (source: BACS)

Prime minister David Cameron said: “It’s not right that suppliers are not getting paid on time for the work they do and the services they provide. The government has already taken steps to help address this issue, but I am clear that more needs to be done to build a business culture across all sectors of the economy that sees the fair, prompt and reliable payment of suppliers become a core corporate responsibility.”

The government is to launch a consultation that will look at a range of issues including:

  • how to encourage greater responsibility for payment policies at board level;
  • what can be done to increase transparency around which companies are good payers and which ones are not;
  • how the Prompt Payment Code can be strengthened;
  • whether more can be done to enforce existing legislation, including the possible prohibition of “grossly unfair” payment terms;
  • what can be done to encourage more companies to make use of their existing statutory right to interest for late payments;
  • whether government can do more to help SMEs through new technologies and services like electronic invoicing and mobile payments.
Prompt Payment Code signatories undertake to:
Pay suppliers on time
  • within the terms agreed at the outset of the contract
  • without attempting to change payment terms retrospectively
  • without changing practice on length of payment for smaller companies on unreasonable grounds
Give clear guidance to suppliers
  • providing suppliers with clear and easily accessible guidance on payment procedures
  • ensuring there is a system for dealing with complaints and disputes which is communicated to suppliers
  • advising them promptly if there is any reason why an invoice will not be paid to the agreed terms
Encourage good practice
  • by requesting that lead suppliers encourage adoption of the code throughout their own supply chains

http://www.promptpaymentcode.org.uk/

steve@bicknells.net

 

How to account for 50,000 members eating breakfasts 4 times a week

Business woman

For anyone running a large networking or membership organisation coping with thousands of transactions of the same value is a challenge. In the case of 4Networking, Tuesday to Friday thousands of members are booking breakfasts online for £12 each (they all need a VAT receipt) [note in addition to breakfasts its £499 plus VAT to join and there is an annual membership fee after the first year], so what information do they analyse, well they need to know, which member or visitor, which group/venue, which area leader, for visitors they need to know the number of visits (so that they can charge when the maximum is reached), when membership renewals are due. Thats a lot of information and to run an efficient network you need to quickly see the results and take action if attendees drop.

The solution that we used was to have a description made up of numbers separated with a # so that you could quickly extract results for any data group or multiple groups.

The other challenge faced is that Memberships cover a future period and to comply with revenue recognition rules the revenue must be phased over the period to which it relates.

steve@bicknells.net

12 ways to get your invoices paid faster

  1. Discuss credit terms with your new client – set the expectation
  2. Change your credit terms to be less than they are right now – research has shown that invoices are paid 2 weeks late. So better to be paid late on short credit terms than late on long credit terms
  3. Get invoices out on time – be clear about what makes a service or product billable and bill it. Don’t be shy about billing promptly, the client has had the service\product, they need to pay for it
  4. Make it standout – clients processing lots of invoices may put it on the pile with the rest, but if it stands out then chances are that it will get paid faster
  5. Be able to report your aged debtors and then chase the late ones rigorously. Send a statement and call them – some people get so much email that it gets ignored
  6. Add late payment charges – you can always reverse them but it will generate a conversation where you can re-iterate your priority to be paid on time
  7. Get the entity right that you are invoicing – if it is called Jupiter Construction Limited, don’t put JC limited on the invoice
  8. Make it get to the right person – does it need to go to the budget holder or accounts payable or both
  9. Do you offer multiple payment methods – cheque, bank transfer, paypal, debit card, credit card – the more methods the more likely you will get paid faster.
  10. Review the average days to pay for your clients and target the late ones – don’t treat all clients the same
  11. Delegate your credit control – if you are running the business and delivering to clients you won’t focus on this and a part time resource can
  12. Send electronic invoices with Pay Now feature – Xero cloud accounting does this

david@graceaccountants.co.uk

%d bloggers like this: