Getting Paid on Time
October 3, 2013
If we don’t get paid, we go out of business. So with more debtors delaying payment in these tough times, taking action to collect money should be a top priority for small companies.
Few small businesses can afford to turn customers away, but you didn’t start your business to provide a free credit service to clients. Try these simple in-house strategies for collecting money:
1. Review payment terms
Re-assess your payment terms for the current market conditions. It could be time to offer additional payment options, such as PayPal, debit card, or to accept additional credit cards.
2. Avoid firm tactics with regular customers
Your regular, normally reliable, clients deserve different treatment in debt recovery. Try co-operation and communication, rather than a heavy hand. Be ready with options such as part-payment or installment plans. Be concerned, but stay firm enough to get the account settled.
3. Focus recovery ‘power’ in the right hands
Avoid the trap of turning your sales people or service staff into debt collectors. Give the job of bad debt follow-up to one person, along with a set of clear guidelines for action and your full support.
4. Set terms at the sale
The best time to get the message through about payment terms is when you close the sale. Outlining credit expectations early sets the right tone and foundations for later accounts follow-up if necessary.
5. Empower your invoice
Instead of a monthly run, consider sending invoices as soon as a service has been carried out or when a product is supplied and print the actual due date on the invoice. These simple changes will speed payment and identify problem accounts sooner.
6. Set a collection policy
The chance of recovering payment reduces the older a debt becomes. Establish rules and then stick to them. You may even need slightly different rules for different client groups. Always make sure to have options such as part payment and installment plans.
7. Collect information
Securing thorough information about a new account avoids obstacles to debt recovery. Collect as many telephone numbers and alternative contact names as you can and ensure all forms are signed.
8. Be fearless and survive
Remember, uncollected income is just the most obvious impact on your cash flow. Don’t hesitate to ask firmly for due payment because you fear losing customers. Non-paying clients are not worth having