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Are your invoicing procedures up to scratch?

Sorting out late payment is one of the most common obstacles that many SMEs face, and having good invoicing procedures is often the first step in solving them.

The first thing to do is to agree defined payment terms. Assuming that just putting ’30 days’ on your invoice will ensure on-time payment won’t necessarily come true. There’s often a battle between companies who both turn to their own terms and conditions in order to either exact faster payment or extend the time. Generally, the last terms and conditions which were accepted before the contract was finalised will be the prevailing ones – but often there are difficulties ascertaining when the contract was agreed.

The best way to get round this is to agree terms clearly in the first place. Even if it isn’t a formal contract – indeed, in some industries no contract is the norm – an email sent after a discussion which has confirmed what is expected of both parties will stand up if there’s a problem.

Another way to keep late payment to a minimum is to know exactly who you’re meant to be invoicing. If you’re dealing with a large company, you might need to invoice a specific department or even a third party – invoicing the wrong person can cause a delay. Larger companies might have even started to use supplier / vendor portals online instead of post and phone. Knowing how to engage with this type of portal, which is often run from overseas, will help you deal with big contracts where it’s easy to get carried away.

Getting your invoicing procedures up to scratch is an essential step to making sure you’re not kept hanging around for payment. However, if you are a victim to this common problem, you can turn to invoice finance to provide some answers – by unlocking the capital tied up in unpaid bills, you can free up that all important cash flow.

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