How to make sure your invoices will be paid during the Coronavirus outbreak
Posted: Wed 18th Mar 2020
If you're selling to other companies and trading on credit terms, you're likely to be worried about if and when your invoices will be paid. Unpaid invoices can create a risk to your cash flow and profitability so Nimbla and Enterprise Nation will look at how you can protect your bottom line in today's volatile economy.
Affordable invoice insurance
Invoice insurance is a sure-fire way to take the risk out of trading on credit terms. If an invoice is insured, Nimbla will quickly replace the money that's lost if that customer becomes insolvent. It's also reassuring to know that Nimbla doesn't exclude insolvencies caused by coronavirus, so it's a safe option during the outbreak. They will pay 90% of the unpaid invoice value if the worst comes to worst and a customer goes into administration or becomes insolvent.
Sole traders, partnerships, and limited companies can all take advantage of invoice insurance. Nimbla can cover credit terms of up to 120 days and individual invoices of up to £110,000 (before VAT). You can insure invoices you've already sent, depending on the invoice terms, and every invoice is always covered for 12 months.*
They have clients in a variety of sectors; construction, manufacturing, wholesale, food & drink, recruitment, logistics and publishing. However, there are no restrictions on sectors.
With premiums from as little as £5.60 per invoice, no annual contract and a debt collection service that's free-of-charge for insured invoices, it's an affordable way to ensure your invoices will be paid.
However, it's important to bear in mind that not every invoice can be insured. Some customers will be deemed too risky to cover, so please continue reading for more tips to get your invoices paid.
Companies large and small
Whether you're working with large or small companies, getting your invoices paid can prove to be difficult at the best of times and the coronavirus disruption won't make it any easier. In a bit of good news, there's a push from several organisations including the Small Business Commissioner and Enterprise Nation for big companies to start paying the small companies supplying them immediately. Last week supermarket chain Morrison's announced they're the first one to implement this policy. While other corporates catch up, always make sure you follow these tips, whether you're dealing with a large or small customer.
"For small businesses, cash flow is the difference between survival and failure. Coronavirus has put unprecedented pressure on the UK's SMEs. We want to urge all businesses to accelerate payments to small suppliers wherever they can." - Small Business Commissioner, Philip King
Six tips to get your invoices paid
Do your due diligence if you're dealing with a new customer. You can use Nimbla for free to check a customer's ability to pay, with the credit risk rated from very low to very high. It's worth checking this before you agree to take on any new work.
Request prepayment if you're worried about a customer's ability to pay. It could be an option to ask for payment upfront so that you have the money in your bank account before you start working or send out your goods.
Make sure you discuss the payment terms with the person who will be paying your invoices and make your payment terms clear with specific due dates instead of "due in 60 days" or "EOM" (end of month).
Get to know the person you're going to send the invoices to and try to avoid sending your invoices to a generic accounts email address. It's harder for them to ignore you if you have a personal relationship with someone.
Don't forget to follow up on late payments. The law on late payment allows you to charge interest to a customer as soon as a payment is late. The Small Business Commissioner has created a tool to calculate how much interest you can charge.
Use accounting software to send your invoices and keep track of payments. Tools like Xero and QuickBooks also allow you to send automated payment reminders to your customers.
Times are tense, and while we keep our fingers crossed for a slowdown of the coronavirus, it's fair to say the outbreak poses a risk to small firms. While there's a lot of talk about insurance policy exclusions, we want to emphasise that insolvencies caused by coronavirus are covered under the Nimbla invoice insurance policy. When combined with the steps mentioned, we hope you have the tools you need to make sure your invoices will be paid.
* Every invoice is covered from the issue date until 12 months after the payment due date.