June 22 Newsletter

How to avoid difficult conversations with customers on overdue invoices

Chasing overdue invoices is an awkward and arduous task.  We will explore the five steps you can take to prevent late payments, avoid awkward conversations and streamline your payment processes. 

• Specify your payment dates

One of the biggest mistakes when sending an invoice is failing to specify the payment date. Without a clear deadline, your invoice lacks urgency - as a result, clients will often deprioritise, delay, or even forget to pay your invoice altogether. Therefore, you must attach a specific payment date to each invoice you send. 

• Send regular reminders

Automated payment reminders are a simple yet effective way to minimise the risk of late invoices. By automating the process you can prevent people from forgetting about your invoice(s) and save yourself a lot of valuable admin time.

• Provide payment options

Streamlining your payment processes is a sure-fire way to combat late invoices. 

The quickest and most efficient option is to set up a direct debit, such as through GoCardless. GoCardless will automatically collect the invoice amount on the invoice due date, or an instalment schedule can be set up giving you some cash flow certainty.

Offer your customers a variety of payment options.  Such as adding a ‘Pay Now’ button on your invoices using Stripe or Crezco. 

• Know who to contact

Often, there is a misconception that the person commissioning your work is the same person paying your invoices - but in most cases, this simply isn't true. Therefore, it's vitally important that you get to know who is responsible for paying your invoices, build a good working relationship with the person paying your invoices, and understand their company's systems and reconciliation periods.  This will help to ensure you get paid on time. 

• Develop a late payment procedure 

Despite your best efforts, you cannot completely eradicate the risk of a late payment or missed invoice. Therefore, you must have strategies in place to address late payments as and when they occur. Here is a brief guide to chasing an unpaid invoice:

1 week late: Attach a copy of the original invoice and kindly explain to your client that their payment is now overdue. As a result, they should schedule a payment as soon as possible. Otherwise, they should contact your team if they need additional support. 

2 weeks late: Send them another reminder that their payment is overdue and there is a risk of additional charges if you do not hear back from them within two weeks. 

3 weeks late: Ring your client and find out exactly why their payment is late. Only then can you decide whether to offer them an extension or take the matter further. Just remember, legal action can be devastating for client relations, so consider that as a final resort. 

Whilst we cannot guarantee you will never receive a late payment again, we're confident these preventative measures will help improve your cash flow without damaging your client relations. 

Plastic Packaging Tax

On 1 April 2022 the Plastic Packaging Tax (PPT) came into force.  Businesses have 30 days to register for PPT from the date they become liable.  You need to register if you’ve manufactured or imported 10 or more tonnes of finished plastic packaging components within the last 12 months, or will do so in the next 30 days.  You will need to pay PPT if you have manufactured or imported plastic packaging components which contain less than 30% recycled plastic.  It will be charged at a rate of £200 per tonne.

What should I do?

• Check packaging - is it subject to PPT?  Check these definitions to know whether you need to pay PPT.
• Work out the weight of the packaging you manufacture or import to find out if you must register for the tax.
• Register for PPT
• Keep records
• Find out if you can claim a credit or defer paying Plastic Packaging Tax
• Complete a return

The accounting periods are; 1st Jan - 31st Mar, 1st Apr - 30th Jun, 1st Jul - 30th Sep and 1st Oct - 31st Dec.  You must report and pay the tax by the last working day of the month following the end of an accounting period.

Please note that you may be charged penalties if you do not submit your return or pay the tax in time, and interest on late payments.

Team News

We can’t believe how quickly 2022 is going!  But we are starting to look forward to summer holidays and getting out more to see our clients.  Please feel free to drop in and see us!

 Until next time,

Katherine, David, Ben and Brandon