Marc Lawn, the Business GP, tackles the thorny subject of how to ensure your small business gets paid by the big boys …
When I speak to small businesses and sole traders there is one thing that always fills them with fear when we touch on the subject.
That is, getting paid by large clients……
Payment is the one thing that, more that any other can cause tension that need not arise in the first place. There is an onus on both parties to make this run as smoothly as possible and in order to achieve that it is important to know something about how these businesses work.
Firstly, consider this, some large businesses are spending literally billions on suppliers all the time and the procurement department cannot manage every single transaction themselves so they have processes in place to make things run as smoothly as possible. The process is fairly standard so the following key tips should be useful irrespective of whom you are talking to.
There are three key things to consider (and remember) which should help you move things along.
Number one on that list is that when you first start dealing with the business you will need to be set up as a new supplier. This may sound obvious, however the process can take a few weeks because often the accounts payable functions are outsourced. To get on the list you will normally have to complete a new supplier form and also submit your company details on headed paper. Make sure you do this early otherwise you will be waiting for payment longer than you expected.
Number two, whilst we all love dealing with our work partners, you cannot start any work without a purchase order number. That number is a company authorisation for you to do the work in the first place. Without it you are exposed, and yes I know, these things are always time sensitive and so you are just trying to help out. If your contact doesn’t display the discipline to get a PO raised in time please do not accept the problem as your own by helping them out. This will only make getting paid harder in the long term.
Finally comes the actual raising of the invoice. There are two things to remember here. Firstly, your original PO was for a £’s amount. You cannot go over that amount without a further PO being provided to you, so if you send an invoice in that goes over expect it to sit in a dark corner for a few weeks until you chase payment and find out the issues that are in front of you. The second thing to remember is to ensure that the description on the invoice tallies to the description of the work on the PO you were provided, that the goods or services have been delivered in full (the small print on the back of most PO’s will say you need to do that before payment, unless you have agreed a payment plan which would be on the PO), and last but not least make sure you send the invoice to the correct place, often it should not be sent to your contact but to the accounts payable department. If you send it to the wrong place it will sit in an in-box and delay things, more often than not.
This may sound like a lot of bureaucracy however remember, there needs to be a ‘formal’ process so that the management can demonstrate the appropriate controls. A few thoughtful interventions by you will ensure that payment time never becomes headache time.
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