In the latest of her exclusive articles for SMEWeb, Small Business Commissioner Emma Jones CBE shares tips for small business owners can get invoices paid on time. Emma runs the independent public body that tackles late payments and unfair payment practices.
Since becoming Small Business Commissioner at the end of June, I’ve come to see that the reasons for late payment are complex and multi-faceted, yet the market requires a simple and straightforward message in order for us to effect cultural change.
To simplify the issue in my own mind, I increasingly think of payment as a two-way/two-party relationship. On the one hand, you have the small business who is keen to win and deliver work and wants to get paid for that work. On the other hand, you have large corporates who, in the main, want to do the right thing and pay their suppliers on time. The secret to success is ensuring both parties and sides know their rights and obligations when it comes to getting paid and paying.
This article focuses on the small business side of the relationship and how a founder can be in the best possible position to contract well in order to get paid on time. If you are this party (which is likely as you are on SMEWeb!) here are my tips for you:
- Know the terms of the contract: I’ve been there myself – you are delighted to have won work from a large entity, you receive the contract and so skim it and sign. I would advise you to look at the payment terms and times carefully so you know the deal from the outset. The Department of Business and Trade has recently consulted on contractual terms for payment and, should the government decide to go ahead with proposed measures, contracts with more than 60 day payment terms will become a thing of the past as it will become law that all payments should be made in a maximum 60 day payment term. For now, be aware of what’s written in the contract.
- Agree invoicing details and process up-front: On signing the contract, confirm the location to which invoices should be submitted and any specific details required on the invoice such as a Purchase Order (PO) number. You may be asked to upload details to supplier onboarding platforms – make this as time efficient as possible by keeping close to hand your company IDs and policies as they may have to be uploaded too.
- Track payment dates: On submitting the invoice, track when payment is due. This is where bookkeepers and in-house accounting support or credit control comes into play. If monies are not received by the due date, chasing should commence. Cloud accounting software providers are building AI agents into their products that can do the chasing for you.
- Communicate and escalate: If time passes and you are still not getting paid, call your contact in the company or escalate to a more senior level to get a response. If this doesn’t work, consider contacting our casework team at the Office of the Small Business Commissioner who can help companies with less than 50 people get paid by companies with more than 50 people, who are not dealing with invoices due. Our dedicated team of case workers will endeavour to get you the right result, whilst retaining the relationship you have with the client.
Follow these steps and you should be in a strong position to get paid on time.
Other content by Emma Jones:
- Chasing late payments? How the Office of the Small Business Commissioner can help
- Focus on the Fair Payment Code and celebrating firms that pay on time