How important is it to pay invoices on time?

By : Forum Moderator
Published 17th June 2020 |
Read latest comment - 26th June 2020

Small businesses and freelancers really rely on you paying on time. It can make the difference between having enough for the rent or not sometimes.

I'm lucky not to be in that situation now, but I remember when I was much closer to the breadline and it's no joke. It also has a knock on effect.

If you pay late, then they may be paying their creditors late etc. This is bad news for everyone, as at some point you might be that creditor.

Research in January this year from digital banking platform Tide revealed that UK SMEs are chasing an estimated £50bn in late payments with the average small business chasing five outstanding invoices at the same time, this wastes up to an hour and a half each day.

That's such a time sink isn't it?

On top of spending ninety minutes a day following up late invoices, it is believed the average small business is owed £8,500. That's quite a significant amount, especially when you're a small business. I

pride myself on paying for work as soon as I can. Be that to a business I have providing a service to me or a freelancer doing work for me. It's so important! I know how much I value clients that pay on time.

Are you someone who waits for the first reminder before you open your wallet?

Comments

Never, I pay as soon as the bill comes in, I don't expect my clients to do the same. There are payment terms in all of our contracts for this, generally 14 days post invoice, some payable on invoice, some 30 days depending on the client and our relationship. We pride ourselves on paying fast, we are lucky enough to be a fairly cash rich company so... you should pass that on right?


Thanks,
James - Akcela

Never, I pay as soon as the bill comes in, I don't expect my clients to do the same. There are payment terms in all of our contracts for this, generally 14 days post invoice, some payable on invoice, some 30 days depending on the client and our relationship. We pride ourselves on paying fast, we are lucky enough to be a fairly cash rich company so... you should pass that on right?”
 

You absolutely should pass it on! Some people definitely don't though. 


I always pay on time  and sometimes pay a deposit. But when I was a teenager they often went unpaid till late late .. But now  I suppose I am lucky that everyone has to pay before their products are sent to them.


Thanks
Andy-C | Pewter World

Great post and bain of all small business owners lives!

Just toting it up, currently owed £9,500, so your average isn't far off   

It's always big suppliers and local authorities that are the late payers and you end up wasting time chasing. It seems to be an institutional thing that large organisations sit on invoices for 30, 60 or 90 days. To be fair not all, some are very regular and prompt payers. I know which of my suppliers will pay quickly and who won't before sending the invoice. It's been worse during the COVID-19 crisis, people have definitely been sitting on invoices, which compounds the issue. One supplier, in particular, is now outstanding from 01 April. I have been promised payment by this Friday, we shall see... 

Day to day sales are done on a pay before proceeding, which is means instant cashflow and no invoice issues. But this doesn't work with larger contracts who are always large organisations with procurement departments and layers of inefficiency  to traverse before getting paid 


Steve Richardson
Gaffer of My Local Services
My Local Services | Me on LinkedIn

Very true Steve that depends on the type of business. As some things you're not going to charge upfront for. 

I was owed nearly £4k at the start of the week but it's down to £3k after a few messages and reminders. Some isn't due yet in theory, and one client has gone very quiet so we'll see what happens there. It's a strange time.

Two that paid yesterday were ones I had written off on my head, so I'm quite glad! 

 


Well I'm pleased to report my April debtor has just paid up as promised, so now down to £8k outstanding 

Keep thinking positive waves, not sure that's a business principle, but works for me 


Steve Richardson
Gaffer of My Local Services
My Local Services | Me on LinkedIn

The company I work for lets customers have 2 months grace ,but when they order for the 3rd time they have to pay in full. Some customers get quite irate as it puts them on the back foot as they can't sell without labels or packaging


Thanks
Andy-C | Pewter World