June 6th, 2014. Ben Lloyd
Computer Says No – Getting Paid as an IT Agency
Have you ever heard of a successful company without a computer? No? How about a computer that never has any problems and works brilliantly all the time? Didn’t think so either. It is for this reason that IT companies are springing up all over the place to help companies and individuals deal with all their various computer problems.
You’d think that this would be a solid business with the cash coming in left, right and centre. After all, IT companies supply a service that is in very high demand, but they don’t always get paid when they should. If this sounds familiar then here are a few things you can do to ensure you get your money:
Get a Contract
If you do a lot of work with a certain company then it is definitely worth having a contract drafted. This can help to protect you and ensure that there is legal documentation saying how much the company has agreed to paying you. With this type of agreement you can set a monthly figure under which you can include all the work you do, helping to eliminate any confusion over the amount of money owed and when it needs to be paid.
Invoice finance for IT companies that deal with a large base of clients makes a lot of sense. This ensures that you receive a percentage of the invoice as soon as they are sent out, keeping your cash flow regular and letting you carry on with business as usual. Another added benefit is that the invoice factoring company will chase up your invoices for you, leaving you free to manage your business and fix technical problems without having to worry about where the next payment is coming from.
Pay as You Go
One alternative is to scrap invoices altogether and operate on a pay-as-you-go system, getting paid after every job you do. This is extremely beneficial for keeping the cash rolling in, although you could lose some clients who don’t like this system and there may be a lot of extra paperwork to fill in to keep ahead of HMRC.
If you find that you are constantly struggling to get your clients to pay their bills, then this will ensure that they pay immediately after the job is done and the fee will generally be smaller making them more willing to pay.
Black List No-Payers
One of the worst things about being an IT company is that there are lots of you. That means that not only is there a lot of competition, but your clients will occasionally try to look for support elsewhere rather than pay their IT bill. If this happens to you then it can be worth your while to threaten to blacklist them – you are well within your rights if they have purposefully not paid and tried to leave you high and dry.
This should be considered a last resort though and it is always worth talking to the company first and telling them that this is what you will do if they continue to not pay their bill. It is important to note that this will, most likely, ruin the business relationship, and other measures such as invoice financing could be a much better solution.
If you’re an IT company who finds itself in a pickle over payments, get in touch today to discuss your options.
Article By Ben Lloyd
June 6th, 2014
Ben is the Director and Co-Founder of the Pure Group and Managing Director of Pure Property Finance.
Following a career in Barclays, where Ben was in the real estate finance team for 8 years, he decided that the market needed a more forward-thinking type of commercial brokerage so founded Pure Commercial Finance (now Pure Property Finance), the first company within the Pure Group.
Ben has extensive experience across the real estate sector and has participated in over £2bn of real estate transactions during the course of his career.
Ben oversees the general strategy at Pure Group and works with the senior leadership team to drive the Group forward. Ben is also on the Executive Committee of FIBA.See more articles by Ben