When you start contracting with a new client, there are a number of things you should put in place to ensure that you get paid on time. Here, a credit control expert outlines the steps you need to take to ensure your invoices and payments are processed as agreed.
Thanks to Adam Home from Safe Collections for his advice.
Agencies and clients can have a myriad of different options and every contract is likely to be different. From a credit control perspective you need to identify the five W’s to getting paid – The Who, What, Where, When and Why.
In addition, it is worth credit checking any new client / agency you work for – even well-known names. No company is too big to fail, and it is worth spending a few pounds to run an online report for the peace of mind it offers.
Does your contract stipulate that timesheets or invoices must be signed off prior to payment? If so, who is responsible for authorising your timesheet or releasing your payment? Are they in the premises you will be attending, or are they working remotely? If the agency runs a self-billing program, who can you speak to if you have a problem or if an invoice is rejected?
If these details are not included in the contract then secure them now, before any issues occur; this will protect your company if the project falters or payment dates are missed.
Just getting your invoices in on time may not be sufficient to secure payment in some instances. If you don’t include exactly what the client or agency wants on your invoice, you are giving them a ready-made excuse to legitimately delay payment. You need to scrutinise your contract carefully to ascertain exactly what is required on your invoice for the client to sign off. Purchase orders or other information may be mandatory for your client to make payment. Make sure you get your invoice right the first time.
If you can’t give the client or agency what they need when you submit your invoices, then you will face problems and delays and you may well alienate their accounts payable department staff. Needless to say these are the last people in any organisation you want to make an enemy of, as they will be the ones who make the payments to your company!
The where can be viewed as an extension of the who. Put simply, if your contract states invoices must be emailed to the agency or intermediary and you post them to the client’s trading address, you are unlikely to be paid on time.
Again, pay close attention to any contractual clauses stipulating where invoices or timesheets must be sent and, ensure you get it right the first time.
The vast majority of contractor agreements we see stipulate exactly when an invoice must be submitted to be processed and you ignore this deadline at your peril. Most of the delays we see in submission are caused by the contractor missing out important details from the who, what and where. If you are searching around for details you should already have when you should be submitting your invoice, you will not get paid on time.
Many agencies will offer some flexibility for missing deadlines, but this is often discretionary, and requires the goodwill of the accounts payable staff. This is another good reason to make sure you dot the i’s and cross the t’s well before you submit your first invoice.
The reason why we recommend contractors pay close attention to their contractual obligations is very simple; because if you don’t, you could find yourself confronted with a late payment problem. If your company doesn’t pay close attention to its invoicing, then you forfeit the right to ask why the client hasn’t paid on time.
If you’re experiencing difficulties in securing payment from your client or agency, take a look at our debt recovery page. We’ve worked with Adam’s team for many years now, and are happy to recommend his company’s services to our visitors.