Category: Business Help

Why sole traders need a separate bank account

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If you are just about to become a sole trader, or have been one for a while, you might be wondering whether it is worth getting a separate bank account for your business. There is no legal requirement for sole traders to have a separate bank account for their business unlike Limited Companies which are required to do so. This is because HMRC views Limited Companies and the Directors as separate legal entities, whereas sole traders and their businesses are viewed as the same. Therefore a Limited Company is required to keep its bank accounts separate from the personal accounts of the directors. For more information about the differences between these two business structures read our blog.

We usually recommend that all of our sole trader clients get a separate bank account for their business. Here are some of our reasons:

1) It makes your accounts more accurate

Having a separate bank account for your business income and expenses has the obvious advantage of being able to keep any other income and private expenses separate. This will stop any chance that they could become mixed up or confused which will in turn ensure that your bookkeeping and accounts are accurate.

2) It stops you missing anything

Similarly, if all of your business expenses are in one account then you know you will not miss anything. It can be very time consuming to go through your personal account and pick out the transactions that relate to your business, so with a separate account you (or your bookkeeper) will not have to do this!

3) It helps to keep your numbers up to date

If you have your accounts separate and your bookkeeping up to date then you will have a better overview of how your business is performing.

With a personal account, you may not be able to get as clear a view of what your numbers are which could lead to making incorrect business decisions.

4) It makes HMRC inspections easier

In the event that you get an inspection from HMRC, the first thing they will look at is your business account. This means that you won’t have to hand over your personal bank statements to them in the first instance. This process is likely to be a lot more straightforward if HMRC only have one bank account to look through.

5) It makes bookkeeping in Xero easier

We can set your Xero up so that it has a bank feed running to your sole trade bank account. This will mean that we won’t see your personal transactions or need you to send in bank statements for any other account. This could also save you money as our bookkeeping service includes up to 50 transactions per month. Using a personal account is likely to put you over this!

We recommend…

Some banks may charge a monthly fee for a business bank account. You don’t necessarily need to have a specific business bank account set up, however some banks do specifiy in their terms and conditions that you cannot use a personal account for “business use”.

Some banks however do specific bank accounts for sole traders, and don’t charge a monthly fee! We particularly like this one from Starling Bank https://www.starlingbank.com/sole-trader-bank-account/

(We are not affiliated with Starling Bank)

As you can see, it makes so much sense to keep a separate bank account for your sole trade business. It will save you & your bookkeeper time and hassle and make sure that you don’t include or miss anything important from your accounts.

Talent Management Planning: Why Do It?

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Talent management planning is a term we often hear floating around the business world, but what exactly does it mean and why should we do it?

To help you gain a clear understanding, we’ll explore what talent management planning is, what it consists of and, most importantly, why it’s beneficial to both you and your employees.

What is talent management planning?

Talent management planning is all about implementing effective strategies to attract, retain and nurture skilled professionals.

What should a talent management plan consist of?

Each company’s talent management plan will look slightly different based on its unique set of goals and objectives. However, each company’s plan should focus on improving these primary features

  • Recruitment
  • Training and development
  • Employee retention
  • Performance management
  • Employee engagement
  • Succession planning

Why is talent management so important?

Talent management planning helps ensure you’re getting the most out of your teams by implementing systems and processes to support their development and improve their performance.

In short, it is the blueprint for hiring and maintaining a highly-skilled, high-performing workforce, which, as we all know, is imperative to your company’s success.

How does talent management planning benefit your business?

Besides the obvious advantage of strengthening your overall workforce, there are several other benefits to implementing a talent management plan. Some of which include:

  • Increased engagement: by demonstrating a keen interest in your employee’s goals and personal development, you will find they are more engaged with their work, making them more productive and more profitable.
  • Efficient recruitment: you can utilise recruitment software to streamline your recruiting process, filter applicants and ensure you’re attracting only the highest quality candidates.
  • Improved staff retention: by offering your employees consistent opportunities to enhance their skills and advance their careers, you’re providing them with a clear incentive to retain their position within your company.
  • More candidates for succession: by adopting formal performance management techniques, you can see which employees are most suitable for senior roles and adapt their training to prepare them for these positions.

How does talent management planning benefit your employees?

Perhaps the best thing about utilising a talent management plan is that it’s mutually beneficial. To demonstrate our point, here are just a few of the benefits your employees can enjoy as a result of effective talent management planning:

  • Better onboarding process: by refining your onboarding process, employees will be more engaged and more at ease from the get-go. So do your best to make the onboarding process as personal as possible.
  • More training opportunities: by facilitating regular training opportunities, you’re providing your team members with the necessary tools to upskill and advance their careers.
  • Greater career autonomy: by partaking in mentorship programmes, you’re able to support your employees with their own career goals by offering advice, recommending training programmes and aligning them with appropriate internal opportunities.
  • Positive working culture: by assisting employees with their goals, funding their training and fostering a culture of growth and development, your employees will be more motivated, engaged and invested in your business.

Don’t underestimate the value of talent management planning

There are countless benefits to developing a talent management strategy, so don’t overlook this opportunity to strengthen your team! Invest in their development, support their career aspirations and focus on creating a compelling company culture. Your employees, profit margins and performance metrics will all thank you for it!

How to combat rising wages and staff shortages

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It’s no secret that hundreds of small businesses are suffering from increased wage costs and staff shortages. These issues span multiple industries, from hospitality to construction, and have only intensified since the beginning of the pandemic.

So, how do you handle rising demands with limited labour?

To help you navigate these challenging times, we’ve curated a list of strategies to boost your staff retention, improve your recruitment processes and increase your profit margins.

Here are our 5 strategies for combating rising wage costs and staff shortages:

1) Hire graduates, and interns, and apprentices

Graduates and interns offer an effective and inexpensive solution to staffing shortages.

Straight out of college or university, these young adults are primed for training, ready to be moulded to your company’s exacting needs. What’s more, studies have shown that hiring graduates can significantly increase your staff retention rates. Approximately  57% of graduates still retain their position five years later.

Hiring an apprentice, whilst quite an investment in time, can also be beneficial for many companies.

Although hiring a graduate may not be a quick fix, it’s a brilliant way to source new talent – plus, the ROI is second to none.

2) Invest in your employees

Loyalty is a two-way street. Therefore if you want your employees to remain loyal to your company, you need to invest in their development.

Provide them with opportunities to upskill, fund their training and encourage them to diversify their skillset. Not only will it improve your retention rates by 30-50%, but it will also allow you to cultivate a team of highly skilled professionals.

3) Utilise mergers and acquisitions

More and more companies are deciding to partake in mergers and acquisitions. Why? Because resources are limited and successors are few and far between.

By combining forces the parties involved gain access to a larger workforce, a greater array of talents and more viable candidates to succeed their business.

Plus, with an increased market share, companies are better equipped to manage rising wage costs as they acquire more capital and increase their profit margins!

4) Delegate administrative tasks

With labour dwindling and demand rising, our employees are really being pushed to their limits. So don’t exacerbate the problem by burdening them with non-essential responsibilities. Instead start automating repetitive tasks and hiring administrative staff to handle any paperwork.

Although investing in new employees and tech can be costly, they can notably increase productivity, profits, and employee engagement. Stop placing unnecessary strain on your staff and start streamlining your administrative tasks!

5) Update your recruitment style

Now more than ever you need to be investing your resources into your recruiting process. After all if you want to solve your staffing issues, you’ll need to attract and attain new employees. So what can you do to improve your recruitment style?

Firstly, you need to be harnessing the power of social media. This allows you to broaden your search whilst offering applicants an accurate insight into your business.

Secondly, you want to focus on your company culture as this can quickly attract or deter applicants. Ask yourself, what makes your company the place to work? Do you offer impressive employee benefits? Do you accommodate flexible working?

Whatever it is that makes your company attractive and unique, make sure to funnel that into your recruiting process.

Take care of your employees

Running a business is never easy, but our current climate is making things even more challenging. We wanted to end this discussion with some words of encouragement.

If your business can survive Brexit, a global pandemic and an inflating economy all in quick succession, it can also survive these labour shortages. Just remember to streamline your processes, adapt your recruitment methods and take care of your staff, as they will take care of your business.

Sole Trader VS Limited Company: Which is better for you?

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Have you been thinking about switching to a limited company because of the upcoming changes due to Making Tax Digital? Has anyone told you that you could be paying less tax as the owner of a limited company instead? We will take you through what the differences are and ultimately help you make the right decision for you & your business.

Regardless of whether you stay a sole trader or become a limited company, if you make a profit in your business then you will have to pay some level of tax. Changing your company structure may change how you pay tax and may be beneficial for some, however there are other factors to consider as well as tax.

What is the difference between a sole trader and a limited company?

If you are a sole trader, then HMRC and the law view you & your business as the same thing. This doesn’t stop you from hiring staff or taking on premises, but what it does do is mean that you are personally liable for any losses or debts that your business makes. The good news is that as a sole trader you can keep all your business profits! Just remember that these business profits will then be taxed as part of your personal income.

A limited company however is a separate legal entity. It will have its own finances and legal reporting requirements, and Its finances must be kept separate from the business owner’s personal finances. As your limited company is a separate legal entity this means that as the director of your limited company you will have limited liability on any losses or debts incurred by the business. However, it is important to point out that if your company takes on any borrowing then the lender may place a personal guarantee on the directors of the business. In other words, if the business is unable to pay back the loan then the directors will be personally liable to pay back the loan.

What are the advantages to being a sole trader vs a limited company?

Setting up as a sole trader is comparatively straight forward. You simply need to register with HMRC for income tax and national insurance to receive your Unique Taxpayer Reference (UTR) number and you can start your business straight away.

There is also relatively little paperwork or administration, although the changes being brought in by Making Tax Digital mean that sole traders will have a legal obligation to keep their accounting records digitally up to date. You will no longer be able to only keep paper records and hand your receipts to your accountant once a year. This makes it easier to understand your finances, your profitability, and how much tax you are likely to pay, and see it in real time. As there is less administration and filing responsibilities, it also means a smaller accountants bill compared to a limited company!

One of the little realised advantages of trading as a sole trader is your financial affairs are very private. They are between you, your accountant and HMRC. There is no requirement, such as with limited companies, to put your annual accounts into the public domain on Companies House.

In your first period of account, if you are likely to make a taxable loss this can be relieved against profit from the past, even if this is from a prior employment, whereas in a limited company this can only be carried forward until a profit is made.

And finally, as a sole trader you are in complete control of your business affairs. You don’t need to consult any shareholders or partners to make decisions.

What are the disadvantages of being a sole trader vs a limited company?

Banks and other investors tend to prefer working with limited companies. This means it can be harder to raise finance as a sole trader. Whilst it is still possible to grow without external funding it can be much slower. After all, most businesses need to buy some equipment, vehicles, stock, or tools to be able to start trading.

It’s not just banks and investors who can look down on sole traders. Many businesses and customers prefer to work with a limited company vs a sole trader as they believe, whether rightly or wrongly, that they will have more protection with a limited company. However most ‘Business to Consumer’ sole traders are unlikely to have this problem with credibility. For example, a householder is rarely concerned whether a plumber is a sole trader or a limited company, they just want a good job done.

Historically the tax rates on sole traders have been more punitive than owners of limited companies. However, over the last 5 years or so this tax gap has reduced significantly with the dividend tax relief being slashed. Currently sole traders pay 20-45% income tax, whereas limited companies pay from 19% corporation tax. However, directors of limited companies must still pay personal income tax between 20-45% on any income from the business via payroll. Dividends from the business are also taxed.

As a sole trader you cannot protect your business name. Anyone can decide to use your business name. This is not the same with a limited company.

What are the advantages of being a limited company vs a sole trader?

The biggest benefit of incorporating and becoming a limited company is the limited liability and the business being legally entirely separate from the people who own it. This means that your personal assets will be secure should your company get into debt or other trouble.

A limited company can also be more attractive to work with – depending on your clients. You can appear to have more credibility and trust as a limited company over being a sole trader and depending on your industry this could make a difference in who decides to work with you.

Another benefit is that you are more able to control your income as a limited company director. By splitting your income between salary and dividends you may be able to reduce your tax bill. Dividends are taxed at a lower rate than income and the first £2000 is tax free.

While you pay corporation tax on all the profit, there is no getting away from paying tax, it is possible to accumulate wealth within the company if you do not need to extract it all and save tax that would be assessable on you if you were a sole trade.

What are the disadvantages of being a limited company vs a sole trader?

Limited companies are more complex to set up and run. There is far more paperwork and administration involved with a limited company. For example:

  • Confirmation Statement with Companies’ House
  • Filing company year-end accounts
  • Corporation tax return
  • Registering with companies house
  • Legal documentation such as articles of incorporation, shareholder agreements
  • Minutes of board meetings and preparation of dividend vouchers

Therefore, having a limited company means it is really advisable to pay for an accountant.

Directors of limited companies still need to:

  • File a personal tax return (which will eventually come under the Making Tax Digital regime)
  • Pay personal income tax

Why change from being a sole trader to a limited company?

When people start in business they often start as a sole trader. After all it is easy to set up and often has less administration or accountancy fees involved than a limited company. There often comes a time when it makes sense to switch over; either because of a desire to involve others in your business in a decision making capacity or pay less tax or become more attractive to potential clients or investors. In fact, when your sole trader profits (not just income) reach £30k it is worth considering changing to a limited company to reduce your tax liability.

Everyone’s circumstances are different and before you decide to make the change do take advice from your accountant. You may find that you are better off remaining as a sole trader.

If you would like more information or advice on whether you should remain a sole trader or become a limited company please get in touch now.

Why do we ask for your bank statements?

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Depending on which service you are on, you will find that you receive requests from members of our team asking for copies of your bank statements.  You may receive different emails from different team members depending on the work they are undertaking for you.  Whilst we try to eliminate asking for the same information on multiple jobs sometimes there are instances where information is requested more than once.  This may be sent as part of an auto request from our system, then again manually by an individual looking at your records in real-time.
We would like to clarify why you are asked for these and why it is so important they are provided to us when asked.

Why do we request copies of your bank statements?

We request copies of your bank statements to check the balances in your accounting software are correct and that all transactions have been correctly accounted for.  Many of you will have ‘bank feeds’ from your bank accounts which feed transactions directly into your accounting software.  Whilst bank feeds are usually reliable there can be instances where they drop out for security purposes or there are blips where transactions are missed or duplicated by the feed.  In order for us to spot these errors in a timely manner, and to ensure your records are always as accurate as possible, we will ask for copies of your bank statements for a given period or as at a given date to check.
If entering transactions from your bank account manually into your accounting software without bank feeds there is always a larger risk of errors – if you would like to discuss bank feeds with us or you need any help with this please get in touch.

When will we request copies of your bank statements?

Depending on your service levels with us or the nature of your business you will get asked for statements at different intervals.  This could be in relation to the following jobs:

  • Bookkeeping service (once a month)
  • Monthly Review (once a month)
  • Quarterly Review (once a quarter)
  • Year-end accounts – 3 months before your year end as a 9 month ‘Health Check’ and again once your year-end date has passed
  • Sole trader accounts and tax return – annually (unless you have our sole trader bookkeeping service)
  • Ad-hoc – if we (or you) notice there has been a problem with the bank transactions or feed we may ask for copies at unusual intervals

How do you upload your statements for us?

You will receive an email from us that looks something like the email on the right.
To upload your bank statements, you need to click on “manage checklist”. The next page will ask you to input your PIN. If this is the first time you have done this process then you will be asked to create one. If you have forgotten it, there is a link underneath to reset it.


You will then be taken to your checklist where you can upload your statements. You will also be able to see the due date, exactly what we need from you, and be able to send us a message using the comment function. There is no “submit” button, but once everything is uploaded we will be able to access it at our end and will be notified that you have uploaded your statements.
The system we use is called Karbon and it is completely cyber-secure and GDPR compliant so you do not need to worry about your information.

What happens if the bank balance in your software does not agree to your bank statements?

If we complete your bookkeeping we will identify and correct any bank issues as part of our service at no extra charge.
If you complete your own bookkeeping we will help you identify the difference.  We can complete any corrections for you for a fee (on request), or alternatively you can complete the corrections yourself. If you complete your own bookkeeping we would advise you check the bank balances in your software to the bank statements weekly ideally or monthly at the latest to make sure any error are picked up in good time. If you need any help with this or are struggling with your bookkeeping please get in touch.

teamwork

Minimum Wage Update 2022

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With costs going up across the board it is unsurprising that the national living wage is also being increased. However, for businesses, particularly small ones, this could have a dramatic effect on wage bills going forward.

From April 1st 2022, the minimum wage will be increasing from £8.91PH to £9.50PH. This is a 6.6% increase on salaries. There are also increases in the lower age brackets, please follow this link to find out full details – https://www.gov.uk/government/publications/minimum-wage-rates-for-2022 

We encourage you as a business to sit down and review what you are paying your staff, particularly if you have people close to the new minimum or if you are wanting to attract new team members. Keep in mind that £9.50PH is now an entry level salary and if you are wanting to attract high quality candidates you may want to pay them more than this. It is also sensible to look at what your competitors are offering in terms of salary. A good place to start is the supermarkets who are currently hiring at £11 PH.

Work out a plan of if and how you need to increase your team’s wages and then implement the changes by the 1st of April.

KPI blog

Setting KPIs for your business: 6 tips

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KPIs (Key Performance Indicators) are metrics that tell you if what you’re doing is working or not. As you can imagine, this makes them incredibly important for productivity and business growth.

How do you know that you’re on the right track to achieving your goals if you don’t measure progress?

How do you know that you’re doing exactly what you should to get to the place that you want to be?

The short answer is, you don’t.

If you want your team to work more efficiently and if you want to actually reach the goals that you set out for your business, you need to start setting and monitoring the right KPIs. Here’s how.

1) Set KPIs for everyone

Regardless of the size of your business and team, you need to set KPIs for each team member. Metrics allow you to measure performance and improve it, so don’t be tempted to not set them at all.

2) Don’t set too many KPIs

This is a big mistake that many business owners make. Avoid this. Less is more when it comes to improving performance, as too many goals affect focus. Aim to have no more than 5 KPIs for each team member.

3) Choose KPIs that are relevant to the businesses overall goal

KPIs need to directly link to the demands of the individual’s role and what the business is trying to achieve, so look at your business plan. Where is the business going? What are the key figures that you need to know and measure?

4) Agree on these with each individual

Once you’ve chosen the KPIs for each individual, sit down with them and agree on them. Set your expectations but also explain how they will support the business by achieving these targets. The more you can show them how they contribute to the overall success of the business, the better.

5) Measure and monitor KPIs

It’s not enough just setting KPIs, you need to measure and review them. Setting and monitoring KPIs is an essential business development task, so schedule in time to review this data every month. When you do, you’ll see what tweaks you need to make to improve productivity and move the business forward.

6) Review and reset these every quarter

As your business grows and changes, your targets will be out of date. Make sure to review them with your team every 3 months so that you can update them and ensure they are still relevant. During this time, give your employees feedback, seek out their views on what is working or not working, tell them how the business is performing, and discuss what they can influence to move the business forward.

Start getting results by setting KPIs

Don’t just set arbitrary goals, set KPIs too. If you do, and you track them and monitor performance, you’ll soon see if you’re getting the results that you want. If you’re not, then the great thing about KPIs is that you can identify that something isn’t working a lot sooner. All it takes is another tweak here and an improvement there, and you’ll find what works best for you and your business.

quiz

The Self-Employment Quiz: Can You Make It Work?

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Self-employment can be a great option for people who want to spend more time with their family or want the freedom and independence that come with running their own business. But is it right for you?

To find out, take this quiz:

**Answer each question with a Yes or No

1) Are you confident in your skills and expertise?

2) Do you have skills and passion for the business you’re considering?

3) Do you enjoy working alone?

4) Do you have good time management skills? (E.g. can you juggle multiple tasks and responsibilities at the same time?)

5) Are you self-motivated and disciplined enough to work without someone telling you what to do? (E.g setting your own deadlines)

6) Are you confident in your ability to take on a variety of roles—marketing, business management, accounting, etc.?

7) Are you a quick learner and do you like to learn new skills?

8) Do you find yourself coming up with and pursuing new initiatives?

9) Can you handle making decisions on your own when things get tough?

10) When things go wrong, are you able to pick yourself up and problem-solve?

11) Do you have the knowledge and skills to make your own product or service?

12) Do you know how to promote yourself so that others will buy from you?

13) Would you be comfortable reaching out to a network of peers or contacts to establish meaningful and lasting relationships?

14) Are you able and willing to forego your paycheck in the early years, in order to earn income from offering your own products and services? (E.g. Can you live without an income until your business reaches breakeven?)

15) Are you willing and prepared to work long hours in the beginning?

16) Are people in your life aware of the effect a drastic change in your lifestyle, career path, or financial stability may have?

17) Can you live with high levels of uncertainty?

18) Are you resilient? (E.g mentally and emotionally)

19) Are you resourceful?

20) Do you regularly set and accomplish personal goals?

Give yourself a point for every Yes answer and give yourself a mark out of 20. If you scored 16-20, you have the best chance of success if you choose to become self-employed!

If you answered “no” or “maybe” to a lot of the questions, self-employment might not be the right path for you or you might have some work to do before it’s the right time.

By no means is this self-employment quiz the decider for whether you choose to run your own business or not. However, it is based on the qualities, skills, and traits you will need to become a successful entrepreneur!

If you want to go for it and become self-employed, look at where your ‘No’ answers are. If you know you’re not good at managing money, consider getting an accountant or bookkeeper for your small business as early as possible. If you’re not comfortable with networking or sales, take some online courses and start practising little and often.

Even if these are not qualities or skills you have a natural proclivity for, you can plan to cultivate them over time.

surprised face

7 Ways an Accountant Can Save You Money

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In today’s competitive business world, it is not uncommon for people to do their own bookkeeping and accounting. There are many reasons why this is done – the most common being that you can save money doing so. Of course, saving a couple of hundred pounds is an enticing prospect, but there are actually many more ways in which hiring the services of one will help you make money instead. Here are 7 ways an accountant can save you money:

1) They free up your time

Time IS money, so the more time you free up doing your bookkeeping, taxes, and financial statements, the more time you can dedicate to the tasks that will actually generate money for your business.

Not to mention that it will take you a lot longer to do all your finances than a professional anyway. Why would you waste your time when you could be doing what you do best and what you actually enjoy?

2) They help you be more tax-efficient

Accountants can help you save money by being more tax-efficient. This means claiming what you can, obtaining loans if you are entitled to financial support, and maximising the tax deductions you are entitled to.

3) They help you avoid fines and penalties

You need to file your taxes correctly and you need to do this on time. With legislation changing all the time, this isn’t easy, and you could be leaving yourself vulnerable to penalties and charges, simply because you didn’t know.

By hiring an accountant, you can always be reassured that you’re filing on time and that your taxes are correct. You can have peace of mind that you won’t get a surprise letter from HMRC and you don’t even have to deal with them at all if you don’t want to.

4) They identify opportunities for growth

Accountants keep your records up-to-date so you will always know the figures of your business. At a glance, you’ll be able to see how you’re performing, what’s coming in and what’s going out, and also your liquidity.

There is power in data! For example, your accountant can help you ascertain how long you could survive if there was a recession, where you can cut down expenses to save money, and where you should be delegating most of your budget if you want to grow.

5) They assist in gaining funding

It takes a lot of time to secure financing from banks and as we said previously, time is money. Your accountant can help you secure loans and financing really easily from creating a business plan and helping you budget to applying and assisting you in the loan process.

6) They advise on investments

If you’re interested in investing, an accountant can help you understand different investment options. From stocks and money markets to real estate and investment vehicles, they can show you how you can grow your money and which opportunities are the best for you and your business.

7) They offer invaluable business advice

As well as accountancy, accountants can offer business guidance to help you increase your chances of success. They can help you build a business from the ground up; they can help you with goal setting and planning, budgeting and forecasting, and pricing to increase your profit margin. This isn’t even everything that’s included in their advisory services so make sure to take advantage of their knowledge.

Spend money to make money

While you can save a couple of hundred pounds doing your own books, you won’t save as much with an accountant and you could actually end up losing a lot more. With an accountant on your team, you can save both time and money while having the reassurance and peace of mind that you’re making sound business decisions for your future.

piggy bank

10 tactics to make sure your invoices get paid.

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Wouldn’t life be simple if you could guarantee that your invoice would get paid on time every time? Sadly, this isn’t always the reality. With the economy coming out of recession, there is a very clear and present danger that your business invoices may not get paid in a timely fashion. Here are our best tips for getting your invoices paid:

1 . Invoice promptly

The longer you take to invoice someone, the more likely the bill won’t get paid. Of course, no invoice normally means no payment… Do you remember the early days of running your business? When you were amazed that some business owners got lax with their billing? Then, you get busy servicing your customers and clients and the admin slips. Before you know it, you become that business owner who has become slow to invoice.

If you are finding that you are getting behind on your admin, then give us a call. We can take care of your bookkeeping and other financial processes to leave you free to run your business.

Cloud accounting software such as Xero, include the feature to do recurring invoices. So, where you have a regular repeating invoice for the same amount with a customer, use this recurring invoice feature to cut down the chance of missing an invoice.

2 .No billing surprises

The more unexpected a bill, the more likely it won’t get paid. If a project is going to occur some extra expense or cost, always talk to the client or customer promptly about it. If you just crack on with it and don’t tell the customer about the unexpected cost coming their way, you risk getting into a payment dispute.

Before you bill someone, always make sure that:

  • They are aware and expecting the bill
  • They have agreed to pay the bill

3. Set up a Direct Debit or payment mandate for your customers and clients

If you have regular customers, getting a direct debit mandate signed from them is a great way to be more in control of when they pay you. GoCardless is an inexpensive direct debit solution that integrates well with the likes of Xero. Our team can help you set up Direct Debit for your customers.

4. Make it easy to pay your invoice

This is such a simple one but easily missed. Make sure you are removing any barriers to pay your bill. Such as:

  • Including a ‘pay now’ button linked to a payment gateway on your invoices. For example, Xero will do this for you with your Stripe account. Some customers may be happy for you to type in their card details over the phone using this option.
  • If you visit the customer on-site, then have the means to take payment whilst you are on site. E.g. with a card machine. Technology is such that you can easily connect a gadget or download an app to your phone to take card payments. No need for an expensive and bulky card terminal.
  • Including your bank details on the invoice. (You will be surprised how many businesses and tradespeople don’t do this).
  • Offer your customers the option to do a bank transfer, set up a direct debit or pay by credit card. If possible, try to avoid offering the option to pay by cheque as getting to the bank can take time.

5. Ask for payment before you start working for the customer or client

There is no rule saying you can only invoice after you start work for a client. In fact, we will ask for payment upfront for some of our services, such as a client wanting a one-off tax return. If you (or your customers) are not happy with a 100% upfront payment, why not ask for a deposit to get the work started?

6. Build a relationship with the accounts payable team at your customer

It always helps to be nice to the person at your customer’s business who actually pays your bill. The stronger the relationship you have with them, the more chance your invoice gets paid promptly and without being ‘delayed’. This may not be your direct contact. It could be someone in their finance or accounts payable team. So, who in the customer’s organisation is responsible for accounts payable? Can you get their name and contact details to help ‘ease the way for your invoice to be paid’?

7. Understand your customers’ accounts payable process

Do you need a PO number on your invoice? How does the invoice need to be addressed and who too? What needs to be on the invoice for it to be paid promptly? Who at your customer’s organisation needs to sign off the invoice before it will be paid? Who in the customer’s organisation is responsible for accounts payable? And can you get their name and contact details to help ‘ease the way for your invoice to be paid’?

When a finance department is preserving cash for a business, they will reject an invoice for payment for the smallest reason.

8. Put in place a process for unpaid invoices

For example, this could include a series of communications when the invoice is issued. Then a call or email the day before the invoice is due to see when it is going to be paid. Then a series of calls or emails a number of days and weeks after the invoice is due to be paid.

Most accounting systems such as Xero will have a feature for automated reminders for invoices. If you need more than the basic invoice chasing that this software will provide, consider using a more sophisticated credit control tool such as Chaser.

9. Consider offering a payment plan for customers who have built up a large unpaid debt

Most customers want to pay your bill. But sometimes stuff gets in the way. So consider offering a payment plan. Getting paid over 6 months in instalments is better than not getting paid at all.

10. Stop work if your invoices don’t get paid

We see this regularly. Where a business owner carries on working for a customer in the hope that the invoices will get paid eventually. The debts pile up and may never get paid. You’ll be surprised how quickly your unpaid invoices may get paid if you stop working for a client.