5 Tips on How To Get Outstanding Invoices Paid Before Christmas
Christmas is only a few weeks away and one of the best presents for your business is a healthy cashflow. As more and more businesses start to get busier in the festive period, paying an invoice may slip the radar which would have a knock-on effect on your business.
If you’re able to get your invoices paid before Christmas, you’ll be able to avoid starting the New Year with a long list of outstanding debt. We’ve pulled together some tips to make sure your invoices get paid before Christmas.
1. Send your invoices in early December
For most of the year, account teams tend to run monthly payments in the last few days of the month so you’ll likely be paid at the start of the new month.
However in December, more account teams tend to move their monthly payment runs earlier in the month so invoices are paid before Christmas – most likely because they’re off from the 25th of December until the start of January.
To increase your chances of getting paid in December, make sure that you send your invoice at the start or middle of December along with a statement of any other outstanding payments. Invoices that arrive in the last two weeks of December are likely to miss the cut off point and will be paid in the New Year.
2. Start with Customers who have a December Year-End
It’s not uncommon for businesses to hold off paying some bills until after their year-end in order to make their accounts more favorable. To reduce the risk of this, send your invoice as early as possible and state that you expect the invoice to be paid according to your terms.
You can find out companies’ year end dates on Companies House. It can be quite a task finding out everyone’s end of year date so if you have any large invoices, it might be worth looking into those companies and seeing if there is a chance of being delayed.
3. Use Digital Invoices Instead of Paper Invoices
If you’re still using paper invoices, it might be time to switch to digital invoices; allowing you to send invoices to clients online.
Online invoicing reduces down on admin and allows you to get your pre-Christmas invoices out in good time. As you will be able to email your invoices directly to your customer’s accounts team or directly to them, it’s can reduce costs and time printing and posting hard copies whilst subtracting the risk of it getting lost or delayed in the post (especially with the Royal Mail strikes).
Additionally, online invoices can make it easier for your customers to pay you and if you need to chase payments up, it can be easier and will be able to show an audit trial of when you have previously been in touch about payment.
4. Use an Invoice Finance Facility
If you do find yourself waiting on invoices to be paid, an invoice finance facility can be an option. This type of finance doesn’t involve making monthly repayments and you only pay interest on the number of days that you use the finance facility for along with any administration fees.
For example, invoice finance can cost as little as 93p per day! Invoice finance works by:
- The invoice finance lender will lend you a percentage of your invoice
- You will have working capital to use whilst you wait for your customer to pay your invoice
- When the customer pays their invoice, you will then pay the lender the amount advanced along with any interest that has occurred.
Invoice discounting finance over a 35 day period, demonstrating how much invoice financing costs:
Invoice value: £10,000
Service fee: £80.00
Value advanced at 80%: £8,000
Cost of funding for 35 days: £32.55
Total cost of funding: £112.55
% cost of invoice value: 1.13%
Total Cost of Funding is the Service Fee and Cost of Funding
How to work out the discount fee is as follows:
80% of £10,000 = £8,000
£8,000 * 4.25% (discount fee & Base rate added together) = 0.0425 = £340
£340/365 (days of the year) = £0.93p per day
For 35days 0.93p*35days = £32.55
5. Build a Relationship with Customer’s Account Team
Your main point of contact might be someone from a different apartment, not someone who would process the invoices. It’s always good to find the name, email and phone number of the correct person in relationship to invoice payments.
From there, building a good relationship with that person might increase your chances of being paid on time in the future.
Contact Amplo Commercial about an Invoice Finance
If you’re looking for an invoice finance facility or would like to find out more information, don’t hesitate to get in touch with our team! We’re happy to provide you with a no-obligation discussion about your business requirements.
Call us on 01270 443510 or complete our enquiry form and we’ll be in touch as soon as possible. If you’re looking for a different finance solution such as bridging loan, business loans or asset finance, as we’re a brokerage, we can arrange a full suite of finance solutions.