Clem Sunter

How to get paid

2010-08-11 12:00

Please note that it is a “p” in the title and not an “l” as this is a family website! A worrying trend that I am noticing from conversations which I have recently been having with small business owners is that their cash flow management is becoming a major problem.

The reason is that they are not being paid within a reasonable time for the goods and services which they have supplied to clients. Surprisingly, they tells me that they experience least difficulty in getting prompt payment from other small businesses. I guess there is a code of conduct between entrepreneurs because everyone is aware of the consequences of late payment or non-payment for a small enterprise run on tight margins.

The worst payers are government departments, state-owned enterprises and other large organisations in the public sector. In fact, some small business owners now refuse to tender for business at national, provincial or local level in order to avoid the hassle of collecting their money.

However, large private sector companies come a close second. Not only do many of them feel that they have the right to delay payment for 60 to 120 days, your invoice disappears into the twilight of the accounts department. If you are lucky, you get a telephone call from an accounts lady asking you to fill in a vendor application form. When it arrives, it takes 10 minutes to download and much longer to complete. Along with providing virtually every detail about your private life, you have to find all those pesky certificates which prove you are an upstanding, tax-paying citizen and send them in too.

So, what are my recommendations to get paid more quickly without having to send round a burly enforcer, go to a credit collection agency or get your client put into a black book (not good for future customer relations)? I offer you six of the best.

1. Get paid before the product or service is delivered. As soon as you have delivered, you lose all leverage.

2. If you haven’t been paid within 30 days, ring the person to whom you sent the invoice and ask if it has arrived. Express concern that you need to be paid to balance your books or that your accountant is on your back.

3. If you haven’t been paid within 60 days, contact the boss of the person to whom you sent the invoice. This will ratchet up the pressure as no employee likes someone complaining to the boss.

4. If you haven’t been paid within 90 days, contact the personal assistant of the CEO. You will never get through to the CEO, but the PA is the next best thing.

5. If you haven’t been paid within 120 days, go round to the offices and cry or scream loudly in the foyer especially when visitors are checking in at reception.

6. Go to the media and complain. No organisation or company likes suffering reputational damage for a relatively small sum of money. You probably won’t get another contract from the client if you exercise this option.

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