The importance of maintaining records
Why is it important to maintain records?
All businesses need to maintain a variety of records, from expenses receipts in order to fill out the annual tax return, to an up-to-date set of health and safety documents which can help to keep on top of any legal obligations. Ensuring that invoices are all methodically recorded, together with payment dates and any related notes, enables businesses to spot any issues quickly and deal with them efficiently. If you have quite a few clients, maintaining records becomes even more important and it can give you an overview, allowing you to track patterns of payment and detect any consistently late or problematic payers. A friendly chat may be all it takes to nip the problem in the bud and promote a more consistent payment process across all your clients.
How do I maintain records efficiently?
Everyone has a different way of keeping records and there’s no one ideal method. Some people use a traditional pen and notepad while others take advantage of spreadsheet software or customer relationship management (CRM) systems. It’s always a good idea to keep electronic records of invoices and store them in an easily reached and clearly titled folder on your computer. You should also make backups to a password-protected USB drive and/or secure cloud storage. Keeping notes on when an invoice was sent, the date payment is due and recording any follow-ups also helps to manage your accounts. The more information you have, the easier it is to assess any particular situation and decide on the best course of action.
Identifying late payers and what to do next
Once you have established that an invoice payment is late, you need to decide how to tackle it. Some businesses adopts a standard procedure for dealing with late payments but it may be useful to approach each case differently, particularly if you have important clients which need to be dealt with diplomatically. An informal email or phone call may be all it takes to get them to pay up but if they are dragging their feet you can send a variety of reminder letters to prompt them in a more formal manner. If this still doesn’t have the desired effect, you may need to consider legal action but, as this is time-consuming, expensive and will probably lead to an end of the business relationship, it should be a last resort.
In connection with debt collection, you need to be aware that the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 will apply in certain cases to prohibit taking any step seeking payment from a debtor.
A variety of documents which may help with maintaining records can be downloaded from our Business Documents Folder.