Top Tips to help you get invoices paid on time
Start-ups face many challenges and risks along the way. Therefore, it can be tough for your recruitment business when invoices are paid late or not paid at all. Surprisingly, this situation happens often for recruiters. The consequences of poor cash flow can affect recruitment entrepreneurs both professionally and personally.
Late pay
On average, 30% of invoices are not paid within the terms agreed. Yet, within recruitment, cash is king. So what could potentially happen when your cash flow is interrupted by late pay?
Typically, it can take 45 to 60 days for an invoice to be processed and paid, regardless of late payment. Furthermore, adding late payment into the equation could result in 80+ days before you get your money back into your business. Moreover, when the invoice date hits 60+ days, recruiters face immense pressure to pay their workers and overheads with limited funds.
Focusing on recruitment businesses, specifically start-up recruiters, late payment can create a substantial knock-on effect. Without payment from clients, cash flow will be scarce, leaving you with no funds to pay your contractors. Furthermore, damaging your reputation and causing your recruitment business to be perceived as ‘unreliable’.
Ultimately, being a small agency, you may not have the financial stability to wait 60+ days for invoices to be paid. In most cases, a recruitment business cannot grow when exposed to cash flow issues. As a result, a common cause for the termination of a recruitment agency is due to cash flow issues.
Tips to help you get invoices paid on time
- Invoice your client on time – This may seem obvious, as you are the one wanting to get paid; however, raising invoices quickly communicates structure and competence. If you invoice immediately, you are likely to be paid on time, as your client is not left waiting to be invoiced. Conversely, if you invoice later than intended, your client may forget about it, causing a payment delay.
- Ensure invoices are clear and accurate – Within an invoice, crucial details must be included. However, an invoice with clear and presentable instructions calls for payment. Incorporating only necessary detail appears professional; therefore, your client unconsciously engages with the invoice that follows in payment.
- Set up reminders for your clients – After invoicing your client, send reminders when the invoice becomes late. Additionally, check outstanding invoices regularly to see if they have been paid. Sending reminders sets a clear statement that you value payment terms, resulting in quicker payments for the future.
The answer is Simplicity
For 18 years, Simplicity has provided market-leading solutions to recruitment businesses. Our recruitment finance solution provides recruiters with 100% funding, including paying your workers and releasing your profit margin each week, improving your cash flow. As well as finance, our solution includes unrivalled back-office support. Our experienced payroll processing team will take care of all your payroll needs, and our collections team will allocate payment and chase bad debt - leaving you to focus on the growth of your business. And last but not least, with access to multiple insurers, we facilitate the best limits we can and reduce your risk with 90% credit insurance on creditworthy clients.
Speak to a member of the Simplicity Sales team on 01594 888518 to find out about our recruitment finance solutions.