Thursday, July 21, 2016

9 Expert Tips To Help Get Your Invoices Paid In Full And On Time

Jenny Esau
For any business, from start-ups to established, getting your invoices paid in full and on time should be extremely high up on the priority list. Encouraging customers to pay on time will not only keep your cash flow flowing in the right direction, but it will also reduce your business’ risk to bad debt. So here we have compiled nine top tips that you can use to encourage timely payment:

Credit risk management can save you a lot of time and money

Having processes in place for credit risk management will reduce your business’ risk to bad debt. Budding entrepreneurs often don’t think about the financial risk of starting a new business, rather they focus a great deal on sales without thinking about their customer’s ability to pay when payment is due. Credit risk procedures can include:

· Credit application forms

· Credit checks

· Monitoring

· Trade references

Carrying out these methods of due diligence with a prospective customer can mean the difference between getting paid quickly and having a debt eating away at your time and money because you weren’t aware of your customer’s poor credit rating.

Make sure your terms and conditions are suitable

Terms and conditions are essential to any business; depending on whose terms and conditions have been accepted you need to ensure that they are suitable for your business. If you are under your customer’s terms and conditions, make sure you read them thoroughly and negotiate on any points that you don’t agree with before accepting. If you customer is under your terms and conditions ensure that you have appropriate clauses in them for non-payment of invoices (such as late payment legislation), as well as receiving adequate acceptance from them (this can include verbal, written or conduct).

Check and double check invoices

Invoicing can lead to some of the most common excuses for delayed payment in the book: ‘I haven’t received the invoice’, ‘it has been sent to the wrong person’, ‘the price is wrong’, ‘the order number is wrong’ and many many more. Mistakes with invoicing will lead to delays with your customers’ payment, so ensuring that mistakes are kept to a minimum will greatly help you to get paid in a timely manner. It is a good idea to ask whoever sends your invoices to copy you into the email, that way, should your customer state they haven’t received the invoice, you can confirm that they did indeed receive it by forwarding the initial email, subsequently you are not obliged to give them any further time for payment.

Organisation is vital

Organisation with regards to credit control can apply to a number of different things. You should organise when you will chase particular customers, and how you will chase them (i.e. by email, phone or letter). Organise customer accounts into customer types, for example, key accounts, high risk and low risk customers; then apply s collection strategy appropriate to each customer type.

Ensure you are consistent and persistent

Waiting until cash flow is tight to chase for payments or giving your customer weeks upon weeks of time to get back to you will obviously not help you to get paid quickly and on time. Consistently chasing your invoices when they fall due will help your customers to fall into a pattern of payment, and eventually your customer will hopefully understand when you expect payment without prompting. The same goes for following up with a customer, let them know when you will call back for an update on payment, and stick to your word; this will spur your customer on to find a quicker answer or resolution.

Remember that credit control is a customer facing role

Your credit controllers should be friendly, polite and persistent, as well as able to form good business relationships with customers. If you think about it, credit controllers are the people encouraging customers to pay, therefore having great customer service skills is essential to the role, people will be less influenced by people they dislike.

Work with sales not against them

I have been introduced many times as the ‘anti-sales manager’ when entering a business as their new credit manager. It is a very common misconception that credit controllers work against sales to get payment in. Sales and credit control should work hand in hand to ensure that all credit management procedures are put into place at the outset, so that the order to cash process will run smoothly and payment will be received at the correct time.

Use the leverage available to you to encourage payment

The leverage you can use to encourage payment from your customer should be outlined in your terms and conditions. These can include:

· Adding interest onto late payment

· Withholding goods or services for non-payment (also known as a credit stop or credit hold policy)

· Withholding goods or services when the account exceeds a pre-determined credit limit

If you are worried about actually adding interest, or putting your customer on credit hold, usually just a polite warning that this will happen within a specified number of days if payment is not received, is enough to spur customers to pay.

Thank your customer

It may sound simple, but thanking your customer once they have made payment can go a long way with regards to your customer relationship, as it shows their prompt payment has not gone unnoticed.

Thanks to our guest blogger Jenny Esau, the Managing Director of Credit Management Group UK; delivering effective B2B credit management solutions for businesses in a range of industries to improve cash flow, reduce risk to bad debt and protect profits. Their services include: outsourced collections, credit management consultancy, training, toolkit and low cost support.

1 comment:

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