Probably the most important role of any Contractor is that of a successful Debt Collector.  This part of Contract work often falls into the same category as tax returns and sorting out insurance and wallows at the bottom of to-do lists, so follow our fail-safe guide and make your life as easy as possible.

Be Clear

When raising invoices, create a template with prompts so that you can ensure you provide as much information as possible on your invoice.  Do not assume that the Accounts department will know what your invoice is for, who it is from or even what your payments terms are.  Lack of information can delay it being processed at all.  Invoices can get permanently filed in pending if they are unclear and cannot be matched up with a booking.

Your invoice should include the following:

  • Company Name, as well as trading name
  • Full Name and Address
  • Telephone number and email address
  • A full description of work carried out – make it as specific as possible including dates when the work was carried out and it is always useful to include a contact name
  • Invoice number and date
  • VAT registration number if appropriate
  • Payment terms, ordinarily this will be 30 days
  • Bank details for payment, including the name the account is under

Get Organised

Keep all your invoices together in a separate folder and create a spreadsheet.  This is essential management so don’t be slack.  There is no point wasting your time and energy remembering who you chased and when, just keep a running log instead and make sure you record all communication in the same place.

Create a spreadsheet with the following column headings:

  • Invoice Number
  • Date
  • Description
  • Date of Issue
  • Amount
  • VAT
  • Total
  • Contact Name
  • Telephone
  • Email
  • Address
  • Promise to Pay Date
  • Notes

Download the Spreadsheet Template here.

Set time aside, we suggest mid morning is a good time, open your spreadsheet and start chasing in those payments.

Get Personal

For each company you work for make sure you obtain a contact name in Accounts. Ask for / or obtain their direct telephone number if they have one and their direct email address and make a note.  Another factor to be aware of is that in smaller companies the Accounts person, normally called Janet (joking) may only work a few days a week, so make a note which days.  Then be nice, Janet and / or Carol can always do more for you than you think, for instance prioritise your payment.

Be Prompt

As soon as you have carried out work then invoice straight away, do not assume that you will receive prompt payment even if you have been assured that you will be.  Once you have established a point of contact in Accounts find out whether they want you to post your invoice or email it as an attachment or both.  Only assume it’s game on when you have had it confirmed by your Accounts contact that they have received your invoice and advised you of a payment date.  Although officially the payment term should be marked by either the date you deliver the work or the date your client receives notice of the amount you owe, depending on which is the latter.

Be Persistent

Within a week of sending your invoice check with your contact either by phone or email that they have received it and when you should expect payment, make a note in your spreadsheet, with date, who you spoke to and the outcome.

If you do not receive a payment date then phone the next week, refer to your previous call, and obtain a payment date.  You can carry on in this way ad infinitum and eventually you will wear them down by war of attrition, basically it’s Supernanny’s technique for instilling good behaviour in naughty children, but often works on tardy payers as well.

Once you have a payment date then call again a week before you expect payment and check you are still scheduled in for payment.

If however this process fails it is worthwhile being aware of your legal entitlements:

The Late Payment of Commercial Debt (Interest) Act (1988) amended in 2002 to include fixed penalties in addition to interest, in relation to debt of less than £1000 the penalty is £40, rising to £70 for debts up to £9,999.99 and £100 above that. Interest is payable at 8 per cent over Bank of England base rate.

These penalties and interest now apply to all businesses regardless of size.

Follow these guidelines and you’ll keep on top of your bottom line.

And if it all goes wrong see the NUJ’s comprehensive advice about late and problem payments.

Also see Crunch’s advice about collecting debts.

Photo by Toni Verdú Carbó – CC