For contractors operating under their own limited company, the benefits are far reaching, however this status also comes with a number of administrative responsibilities that they may not have come across if they have previously been employed (umbrella or otherwise).
One of the main issues that PSC contractors struggle with when it comes to administrative requirements is credit control, a rather daunting task for many, but one that is vital to cash flow. Below we will take a look at our top tips for effective credit control for PSCs.
Tips for effective credit control
Send timely invoices
To maintain cash flow throughout the month, we highly recommend that invoices are sent out as soon as possible, this may be following the completion of work, or at increments throughout a project. It goes without saying that the longer you wait to send an invoice the longer you have to wait to receive payment following completed works.
Keep track of accounts
At times payment can be delayed by client enquiries and therefore it is vital that PSCs keep track of each and every conversation, to keep track of its progress. Providing a short overview of previous conversations with a client at the outset of any subsequent conversation is a great way to ensure neither party go over the same point time and time again, increasing their chance of getting paid more quickly.
Hearing the terms credit control and chasing for payment can strike fear in the hearts of many, and subsequently, contractors often put off chasing until their cash flow is in trouble. However, credit control doesn’t need to be a daunting task, as long as it is approached in a customer focused manner. Chasing as soon as a payment becomes overdue, and politely asking for a payment date is highly unlikely to upset a customer, but should actually work towards building upon a positive customer relationship.
Don’t just stick to email
Using a variety of chasing methods is likely to increase your chance of payment rather than sticking to email alone. A phone call, for example, is a very quick way to receive a payment date or identify an issue. We would recommend starting chasing with an initial email but move up to phone calls once a payment becomes further overdue.
Administrative requirements for a PSC can take an inordinate amount of time that could be better spent on your core business. Here at Sterling, we are on hand to offer expert guidance to the contractors we work with alongside accountancy support. Contact our team today to find out more about how we can support you.