Getting paid

Life would be easy if we all got paid in cash the moment we’d finished our work, rather like a market trader getting a handful of coins in exchange for selling a bag of bananas. Unfortunately, it isn’t always as easy as that so it’s really important to understand how you’re going to get paid and take this into account when thinking about your cash flow and the money you’ll need to start your business.

• If you’re doing something like running a stall or a café, you’ll probably be dealing in cash so you’ll get paid straight away for what you’ve sold.

• With other work, such as cleaning houses or gardening, you may get paid weekly or monthly. This may be by cheque, which means you’ll need to pay the cheque into your bank account and then wait a few days for the cheque to clear before you can spend the money. Money Matters to Me has information on banking and cheques if you’d like to find out more.

• If you provide a service, you may well end up having to give people invoices and then wait for them to pay you. An invoice is basically a piece of paper or an electronic file that you give to someone that you have done some work for. It should have your name and address on it and set out how much the person owes you and when they should pay it by. Sometimes you can get people to pay some of the money upfront when they start work – known as a deposit – but other times you have to wait until all the work is done before you can invoice. It really depends on what sort of work you’re doing so you should look around and see how other people doing similar work are getting paid.

If money you’ve earned is slow coming in, it’s easy to get into a situation where you can’t pay people that you owe money to.

Business Link has lots of good information on how to increase your chances of getting paid on time.