Getting Paid on Time at Christmas

The Christmas period is almost upon us. It's a time to be merry and dispense peace and goodwill to all men!

It's also?one of the most dangerous times of the year to experience cash flow problems.

How peaceful will you feel seeing all those unpaid invoices in the New Year?

As well as being a good excuse for mince pies and mulled wine, Christmas is often a time of winding down. The retail sector excepted, many businesses either shut down or operate with a skeleton staff for much of December. On top of that, there are further absences due to seasonal illnesses and, of course, the party season.

Overdue accounts you let slide in December may not be paid until late January or even later!

It's not hard to imagine the cash flow headache, all that is.

No one wants an overdraft for Christmas and a big pile of overdue invoices to chase come the new year. Take action now to ensure you don't step into the New Year with a planet-sized hole in your bank account.

1. Be prompt when sending your invoices during December

Don't wait until the end of the week or month to send your invoices. Send them as soon as you've done the work or sent the goods. The sooner your customers have them, the quicker they can process them.

Many businesses have specific payment run dates. They are likely to bring them forward during December. If you don't get your invoice to them before the cut-off date for processing, you won't get paid.

Be clear with your payment due dates, and make it clear that all you want for Christmas is to get paid on time.

2. Follow up invoices to ensure receipt

A quick courtesy call lets you know they are being processed.

Use this call to find out what your customer is doing over the Christmas period and when their payment runs will be.

Are they shutting down? Are key people – e.g., the person who pays the invoices – taking any annual leave? Who will take care of things in their absence? Get dates, names and contact details.

If it looks like no one will be in the office to pay your invoice when it's due, broach the subject of early payment.

3. Suggest payment by BACS

If your customer usually pays you by cheque (yes, some still do!), then suggest a BACS payment this time.

They can schedule it in advance. That way, they don't need to feel they are losing out by paying you early.

4. Chase payments before their due date

You need to put extra effort into chasing your debtors at this time of year. The closer you get to Christmas, the more difficult it will be to get hold of the person who makes the payment.

The prime time for taking annual leave is always the two weeks on either side of the Bank Holiday. If your invoices fall due during those two weeks, be sure to start chasing for them in plenty of time beforehand.

Don't be afraid to remind your customers that you expect timely payment. Having regular contact will remind them you exist and need paying. And your invoice is more likely to get processed before Christmas.

5. Pushback requests to delay payment

When chasing for payment, you may get requests from some customers to extend payment terms until early January because it's their year-end on 31st December. They want to boost their figures for their year-end accounts by keeping your money in their bank account. Unless there is something in it for you, such as an interest payment, then why should you sacrifice your cash to make them look better?

6. Pay your suppliers on time

If you have payments that are due over Christmas, be sure to do as you'd be done by. Make sure you pay your suppliers on time. If this means paying them a bit earlier, see it as a Christmas goodwill gesture and an investment in your supplier relationships.

If you'd like to chat about getting paid on time, drop me a message, and we can arrange a call.