How long does an average company take to pay an invoice?
Even though you could send the same invoice for the same product or service to two different companies you’ll probably find one of the companies pays you quicker than the other. You might find one company pays up front and extracting money from the other company is like squeezing water from a stone.
Overall there are only a few possibilities for a company to pay you. They could pay up front, they could pay on time, they could pay late, or they could not pay you at all. If that happens, talk to me about how you can claim non-payment as a bad debt and get it written off your tax bill.
However, for the companies who do pay, is there an average payment time? You may find small companies hold on to your money longer, so they can pay their bills, staff and suppliers. Equally, large companies may demand payment terms of 60 days credit, 90 days credit or 120 days credit. If you deal with supermarkets or global companies, they have a reputation for holding on to your money for longer, so they can accrue vast sums of interest in their account.
My top tip is don’t be afraid to ask for your money. Try to break a late payment cycle. If your customers pay you late, inevitably there will be a knock-on effect and you’ll pay your staff late and suppliers late, and so it goes on.
If you invoice your customers promptly, there is plenty of evidence to suggest your customers will pay more promptly. They may pay before the due date if it ties in with their payment run or the day their bookkeeper is in the office.
It can really improve your cashflow if your customers pay their invoices quicker, especially if you can bring in the money before bank holidays or seasonal holidays, where there is a potential to be kept waiting. Invoices sent around Christmastime might not be looked at until January, when staff return from holidays.
If you don’t send an invoice for days or weeks after providing your product or service, it can imply that you don’t care. If you don’t care enough to send your invoice in a timely manner then your client might delay paying thinking that you don’t care, you won’t mind, or you won’t notice. Many thousands of pounds are lost from companies failing to invoice customers for products or services.
Another top tip is do not offer credit to new customers or anyone you know will be a late payer. Having automated invoicing and payment reminders can also help with the accuracy and frequency of payments. It’s possible to generate an instant invoice when on-site with a customer or send an invoice directly from your phone. Having late fees or adding interest can incentivise companies to pay you more quickly, or at least to pay you by the due date.
For more advice on debt collection or debt recovery, please get in touch. I can work with you to create payment plans and strategies to use with your customers to help you get paid quicker and with less stress.