Minerva Accountants Bristol and Somerset
Fully digital Xero accountants taking the hassle out of your business
Cash is king and most small businesses fail due to lack of cashflow. Even if you have a relatively small business you can use accounting software like Xero to:
Did you hear that a lot in your school days? Even though most of the rules seemed a bit, well, stupid? I certainly did!
A few weeks ago, I broke one of my own rules. It was a good rule and there to protect me, but I was doing somebody a favour to help them out. (You’ve probably made the same excuses yourself)
A training company was looking for a speaker at short notice and a colleague recommended me. There was a lot of backwards and forwards to see if I was a good fit which meant that time was even tighter by the time it was all agreed. And then they sent over their terms and conditions for signature which were different from my standard speaking terms in one main respect. There was no up-front payment.
As most of you aren’t professional speakers, I’d better explain that, for a speaking assignment like this, I would spend 2 days learning the material (I usually spend a similar amount of time writing my own) and rehearsing so that everything is flawless without looking over-rehearsed. I spent a day travelling and a day delivering the content and incurred related expenses. 4 days work plus travel and hotel costs.
Event organisers may charge attendees up-front, but they prefer to pay their speakers after the event (Although far too many expect speakers to work for ‘exposure’, but that’s another problem). Event organisers often cancel at short notice if they don’t get enough people signed up which can leave speakers with wasted time and prebooked travel costs. This is simply solved by charging a deposit at the time of booking.
As everything was done at short notice to help out the new client there wasn’t time to negotiate a deposit.
So, I did ALL the work and incurred all the costs before invoicing them at the earliest possible moment and guess what?
They didn’t pay on their agreed date! And they didn’t even bother to let me know why not!
Anyway, several weeks later and after wasting far too much time chasing, I finally got paid.
But I won’t be making that mistake again.
Please learn from my mistakes and get paid up front where possible. At Minerva Accountants our annual fee is all paid by direct debit before the year end. Have a look at your terms and conditions and see if they could be tighter.
What are your payment terms? Do you even have stated payment terms?
Most businesses seem to opt for 30 days from the end of the month of invoice which means that the wait an average of 45 days to be paid.
But accounting systems are far faster now than when I joined the workplace 30 years ago so surely it’s easier to register, approve and pay invoices much faster now than all that time ago? Personally, as a small business, I find it easier to pay invoices as they arrive to minimise admin time. But not everybody is in such a strong cash position.
My standard payment terms are 7 days from invoice so an average of, well, 7 days. And most of my clients pay me by direct debit which costs a few pennies but the integration between Gocardless and Xero means that it does all the bookkeeping entries to so saving me precious time.
When speaking at conferences I’m always paid the full amount before I travel to the event as organisers like to take a few days off afterwards rather than fuss over invoices.
Is it time to review your payment terms to improve your cash position and, in turn, to pay your suppliers faster?