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Establishing clear payment terms is one of the easiest steps on the road to getting paid on time and getting paid promptly might be harder than you think.
Across the UK, nearly 40 per cent of all invoices sent out by companies were paid late, leaving businesses with an average of £34,286 missing from their accounts.
It’s not just your account balance that suffers from late payment of invoices. Recent survey data has indicated that:
While clear and well thought out payment terms aren’t magically going to solve the issue of the £50 billion in unpaid invoices that UK businesses have to chase every day, it is one factor in implementing effective credit control.
If you don’t currently have a clear set of invoice payment terms in place, we’ll be showing you what they are, why they can help you get paid on time, and how to improve your payment terms.
Invoice payment terms, often shortened to payment terms, are instructions on how and when you want to get paid for your goods or services.
They form part of the contract you sign with your customer and set out, in detail, your payment details, your preferred payment method and how long the customer has to pay your invoice.
That last part is vital as it can have a huge impact on your business’s cash flow.
There are no mandated or specific payment terms you have to abide by.
In the UK, the usual payment window is 30-days and GBP is the primary currency.
In the EU, especially in Scandinavia, there is a trend for shorter, 14-day payment terms, while in the U.S 60 or even 80-day payment windows are not unheard of.
Outside of the UK, most international businesses are happiest to trade in USD.
The payment window included in some invoice payment terms is often shortened to an acronym. Some of the most common are:
Your unique payment terms will likely reflect the specifics of your business, but there are a few things that every set of payment term should outline:
If you’re a small business owner, the sad reality is that a lot of your invoices are going to be paid late. Thankfully, there are steps you can take to mitigate the impact of late payments.
Having clear and highly visible payment terms in your contract gives your customers no wiggle room when it comes to paying you. Making it part of your contract means the customer has read, understood and has agreed to those terms in advance.
We always recommend that you include late payment fees as part of your payment terms to further incentivize your customers to pay on time.
Having clear payment terms is just one factor in implementing effective credit control. There are other steps you can take, including:
Chaser’s innovative take on automation allows you to keep all the time and effort saving benefits of an automated system, without any of the blandness.
Our editable templates make sure all emails sound like it comes directly from you and is sent from your email address.
You can schedule multiple email reminders to send to different customers at different times and even have our platform send out automated ‘thank you’ emails when payment is received.
Chaser has helped our customers recoup 80 per cent of their outstanding invoices and get paid an average of 16-days faster.
Effective credit control is effort-intensive and might take you away from focusing on growing your business. You might also not be in the position to hire a dedicated staff member to manage your accounts receivables.
Outsourcing your credit control to our professional team means you get the benefit of having in-house accounts receivables staff at a fraction of the cost of actually hiring.
Making it as easy as possible for your customer to pay you is always a good idea. Each Chaser reminder includes a line to a Payment Portal that is unique to your customer.
Our Payment Portals allow your customers to pay you directly from your invoice, contain all the required payment details, and support multiple payment options as well as credit and debit cards.
If you’re interested in learning more about how Chaser can help you overcome the cash flow challenges of late payment, book a demo with us today.