What is an invoice and how does invoicing work?
Invoice payment terms outline to a client when the invoice needs to be paid by. They also outline the accepted forms of payments, whether that’s a credit or debit card, or BACS transfer, as well as late payment penalties.
Invoice payments terms in the UK should be agreed before you send your invoice to the customer. If a payment date hasn't been pre-agreed, the customer must pay you within 30 days of receiving your invoice or the service.
You are within your right to charge interest for a late payment and you can use a statutory demand to formally request payment of what you are owed.
What are the most common invoice payment terms in the UK?
The most common payment terms in the UK for invoices are as follows:
- PIA - Payment required in advance
- Net 7 - Payment required 7 days after the invoice date
- Net 10 - Payment required 10 days after the invoice date
- Net 30 - Payment required 30 days after the invoice date
- Net 60 - Payment required 30 days after the invoice date
- Net 90 - Payment required 30 days after the invoice date
- EOM - Payment required at the end of the month that the invoice was sent in
How do I get my invoices paid quicker?
Getting paid on time is essential to having a good cash flow within your business. In an ideal world, clients will pay their invoices within the agreed payment terms without needing a reminder, but most invoices end up needing to be chased. Here are a few tips to help you get paid faster:
1. Agree your payment terms before you start the work
This means there’s no confusion further down the line.
2. Record your time
Calculating how much time you’ve spent working when putting together your invoices can be time consuming and inaccurate. You can make your life a lot easier by keeping a log of your time as you work, and this also makes it easier to see if you’re over or undercharging your client.
3. Ensure your invoices aren’t confusing
Any confusion could result in a delay to your invoice being paid, so it’s important to detail any work in a way your client will understand, as well as including your company logo and details so they know who it’s from.
4. Send the invoice to the person paying it
This might sound like common sense, but you don’t want it to get lost in someone else’s inbox and risk a delay in your payment.
5. Send your invoice as soon as possible
The sooner you send your invoice, the sooner it will hopefully be paid.
6. Keep communicating
Overdue reminders, account statements and phone calls help keep a consistent line of communication regarding your invoice and will ensure it is paid sooner.
7. Overdue fees
Making a client aware of your overdue fees upfront will hopefully kick them into action when a payment deadline is looming. If they ignore these terms, you are entitled to charge interest, but this might not always be good for your client relationship.
Have you thought about Invoice Finance as a cash flow solution for your business?
Invoice finance allows you to release cash quickly from your unpaid invoices.
As your lender, we can release up to 90% of your invoices within 24 hours. On payment of the invoice from your customers, we will then release the final amount minus any fees and charges. There are different types of invoice financing options available to businesses depending on the situation and the level of control they require in collecting unpaid invoices.
We are an invoice financing company who offer a solution whereby payments are collected on your behalf managed by our team of expert credit controllers so you can focus on running your business. Our Confidential Invoice Discounting solution is offered to businesses who want to maintain their own credit control processes, therefore this remains strictly confidential so your customers are unaware of our involvement.
The benefits of invoice finance companies such as Novuna Business cash flow
Want to understand more Cash Flow Finance terms?
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