One of my very regular clients paid a couple of invoices, on time as they always do. Except one invoice was missing. I am going to name and shame the guilty culprit.
Naturally I sent them a polite reminder, to which they said, yes: it’s been paid. There followed a pantomime like “Oh no it hasn’t” email chain. Which culminated in me examining in detail the missing invoice.
I am embarrassed to say it was incorrect. I had managed to retain the content of one invoice and replace the number – making me think I had created a new invoice.
If you have attended one of my finance training sessions, you may have had me ask you: “what is the number one cause of late invoice payment?”. After debating numerous causes – cash flow, companies retaining money in the bank, greed – we always come back to the issue, as quoted almost every year in Accountancy Age and other finance trade publications.
The cause is incorrect details – created by the sender of the invoice. The fault is not on the part of those who have to pay but who have to be paid.
Readers, I am the culprit. At least, in this case.
On the plus side we live and hopefully learn. I can say I walk my talk. And in addition to sending a polite reminder to my clients ahead of the due padte for payment, will check my invoices more closely now.
When are you next sending an invoice?
Stat of the Week – 90% of profits from 5% of customers- the proportion of profits made by UK based gambling companies, as reported in the Financial Times.
What this stat does not say – is the human misery that results from this. The UK’s largest gambling company (outside the National Lottery) has been fined for regulatory shortcomings this week – 3 years after being fined for exactly the same shortcomings. In other news the UK’s likely next Prime Minister, Liz Truss, presents herself as an opponent of too much regulation.
Buzzword of the Week – Factoring
Definition – A company buys a debt or invoice from another company. In this purchase, accounts receivable are discounted to allow the buyer to make a profit once the invoice is paid, while providing the seller with immediate cash to continue trading. Factoring transfers the ownership of accounts to another party that then chases up the debt for the full amount and profits when it is paid. The factor (seller) is required to pay additional fees, typically a small percentage, once the debt has been settled. The factor may also offer a discount to the indebted party.
Also known as invoice discounting, receivables factoring or debtor financing.
Alternate View – Provides another way of getting money into a business’s bank account more quickly. This becomes very important when some (frequently large) companies settle invoices in periods of over 60 days. Would you want to wait that long? But you need to look at the cost, which may be greater than an equivalent overdraft facility (short term revolving credit)
Coming Up…
A series of open webinars for BIPC Worcestershire: aimed at start up and small businesses, but open to all – and free.
Zero to business set-up in 60 minutes Wed September 14th 2 – 3.00pm
Writing a Business Plan Pt1 Thurs October 13th 2.00 -3.00pm
Writing a Business Plan Pt2 Wed Nov 16th https://www.eventbrite.co.uk/manage/events/395162801577/preview_publish