By Andrew Kingstone - Updated on April 12, 2021As we start the new financial year and many of the government support schemes come to an end, it is likely with the borders still closed to several countries, that we see more businesses facing distress, causing a flow-on effect around late payments as the year progresses.
That said, there are several things you can do as a business owner to magnify your chances of receiving your payment on time.
Be Prepared
Whether you are putting together your annual budget or reviewing your credit agency – preparation in business is key! A truly well thought out effective credit management strategy should be one of the most important aspects within your business – it provides continuity and sets the benchmark for best practice on many financial aspects of the business. For many client’s it sets out the day-by-day strategy for the customer experience journey from the time the order is placed until payment is receipted – it provides a cohesive, coordinated, and professional credit management process.
Timely Invoicing
Be sure to get invoicing done and sent in a timely manner (via email if possible) as soon as the work/goods are supplied. The invoice needs to be very clear around services/products provide, and it puts the invoice front of mind for client payment runs which will ensure sufficient time to settle any disputes should they arise.
Early Payment
If your business can offer early payment discounts, then this is another way to ensure the payment for your services is at the front of the queue. Ensuring you are getting paid early will significantly assist with your cash flow and the lag between paying for your good and receiving the payment.
Ensuring Payment
At any stage of the customer journey, one should never lose sight of getting paid, and managing the cash flow of your business. Before the customer can place an order or receive services, you must gather and assess all the information available to you around or customer and their ability to meet any commitments to you. Appropriate account application forms and the standard credit checks should form an integral part of the onboarding process – a regular review around this should also be done to ensure information is up to date!
Appropriate credit control will take over the process once the orders are placed, and your sales team will also need to be updated around payment defaults or issues so that no further stock is provided while any disputes are resolved.
Regular Reviews
As part of your credit management process, one must be regularly reviewing customer “payment activity” to ensure nothing is beyond the pre-agreed payment terms or there has been a breach of the payment arrangement in place. No further supplies or credit should be given until things are back in order.
Maintaining Contact
No one likes a call from a credit manager, and these should not be only made when there are issues, as it not only establishes and builds an ongoing relationship but may increase or encourage them to buy more from your business in the future. It will also ensure that they have an immediate point of contact if there are invoice/payment problems.
Enforcement
When a debtor goes rouge or there are payment issues it can impact cash flow immediately and immediate action is required. Accounts should be placed on stop and the sales team advised!
If your negotiations internally are failing and taking a lot of time with no traction then bringing onboard a third party will encourage the customer to pay, and a debt collection agency will use its expertise to obtain payment much quicker than you may.
A Different Approach
At Gravity Credit Management we are more than a Debt Collection agency. We understand that for many owners their business is not merely a job. It is their identity and for many their purpose second only to their families.
Feel free to connect for a chat around your business needs, we are there to support, guide and ensure you receive any monies that are due to you.
No success, no fee – you will not be disappointed.
