However, suppliers sometimes don’t negotiate payment terms, or don’t have good invoicing and cashflow management processes in place.
Getting it right
Accountants are ideally placed to help their small clients get it right. Research in 2019 showed that 42% of invoices were submitted with errors by small suppliers. Those don’t get paid. Eventually they have to be re-submitted and the clock starts ticking again. Helping your small clients to get their invoicing processes and cashflow management in place is one of the greatest services you can deliver, especially as the cost of doing business soars and every penny is required to help pay the bills.
Small firms and freelancers often work for several customers, each of which have different payment processes and invoice requirements. Helping your bigger clients to provide all that information to each business or freelancer they work with makes life easier for everyone. Working as partners benefits all.
The person who pays may know nothing about your client, is paying according to the firm’s standard payment terms, and may well have no experience of how a small business manages cashflow. They have a job to do, and they don’t prioritise payments to small businesses, nor understand how complex their own processes may be for a small supplier. A £30,000 invoice may trump a £300 invoice. They’re thinking about figures and processes, not people.
Where you come in
You can help your smaller clients get all the correct processes in place from the outset. You are also well placed to help your bigger clients understand the world their vital small suppliers operate in, and why it’s important and to their benefit to do the right thing. Small business owners are the talent that help the bigger customer make money and build a successful business. If they fail, they can be difficult to replace.
- Please encourage your clients to negotiate fair and fast payment terms before the work begins
- If suppliers have to pay out for labour or materials in advance, agreeing up-front or staged payments to cover those costs will benefit everybody
- Putting everything in writing helps to avoid time wasting and costly disputes later
- Ask for and give explanations: what does ‘standard terms’ mean? Small suppliers may erroneously assume it means 30 days. If it means 90 or 120 days, they need to know
- Ask for details (such as Purchase Order numbers) or provide details of everything that needs to be included on invoices
- Make sure everyone knows when the invoice should be submitted, to whom and when the money will hit the bank account
- When suppliers and customers have named contacts, they can check they’ve provided all the necessary information rather than just leaving payments to fate
Where we come in
If payments are late, we at the Office of the Small Business Commissioner can help resolve disputes. Moreover, if our investigations uncover poor payment practices we may be able to publish reports about those, with any reports eagerly awaited by the press. We’re free and here to help, so please use us.
Help your clients avoid conflicts and #PayDontDelay. Everyone benefits when payments are fast and fair.