5 Credit Control Tips: Don’t Let Scary Cash Flow Keep You Awake This Halloween
19 October 2018.
It’s certainly not uncommon to be freaked out this time of year.
The creepy costumes, horror movies, pumpkins….and of course those terrifying unpaid invoices.
While it may be tempting to throw them in a draw or hide behind the sofa, this will not keep the horror away.
Just like all those horror villains that you enjoy seeing vanquished in the end, these invoices and late payers must be confronted.
However, the process is gruelling. The more time spent chasing those late payments you less time you have for growing your business, investing in new projects and trick-or-treating!
While involving a third-party is a great option, it is important business owners know how to minimise credit control issues and protect their cash flow from further horror.
Here are 5 tips that the Credit Protection Association has put together to keep our Members safe this old Hallows Eve.
No 1.
Monitor your customers!
This may seem simple but you’d be surprised the difference it makes.
This means reviewing your sales ledger on a daily basis. It is useful to keep a close eye on who are approaching deadlines and who have missed them!
Giving your customers a quick email or follow-up phone call as their payment day approaches can also allow them to voice any concerns and confront any problems head-on.
At the Credit Protection Association, our credit monitoring services are championed by our Members. The CPA credit reports, credit rating information, directorship register and County Court data all help business owners record the progress of customers and suppliers, flagging any financial difficulty and bad payment practices.
No. 2.
Check the invoice!
This is an all-too-common issue
Payment is frequently delayed or disrupted by minor invoice errors. Bad payers will jump on any excuse to disrupt payment, so don’t give them one.
Double and triple check the company, name, amount, credit score etc BEFORE you send out the invoice. Sending the invoice by email as well as by post can also prevent any standard “it got lost in the post” excuses. Another follow-up call would be useful here as well, just to check the invoice was received and all is well.
The accounts team at the Credit Protection Association is pedantic to a fault, and we encourage our Members to follow suit. At CPA we have a very successful email recovery system and understand that ‘snail mail’ is not always the most reliable and/or quickest method.
No. 3.
Agree on the terms upfront!
This is probably the most important point and the very first thing that should be done.
When beginning any new business, set your expectations first. This means how long they have to pay and what penalties are in place for late payment. Also make it clear what work is needed, for how long and how much.
If everything is put on the table early, this should prevent payment disputes or misunderstandings further down the line.
The team at the Credit Protection Association has the expertise to advise on how to word your contract and how to handle any fallout. Get in touch!
No. 4.
Maintain a positive relationship
Restrict your death stares and snarls to your Halloween costume. Do not allow any personality clashes to show in your correspondence with the customer. Keep it as sweet as your mum’s pumpkin pie.
Customers are more likely to pay on time when their supplier is polite and courteous. It also helps to keep an ongoing rapport by email or telephone to ensure they communicate any issues.
Of course, a tougher approach is sometimes necessary if the customer refuses to pay or take ownership of the debt. In this case, adopt a firmer tone, but always remain polite. Never raise your voice as this will merely escalate the matter.
At the Credit Protection Association, we enjoy congenial relationships with our Members and encourage them to pursue as such with their customers and suppliers.
In business, being mean never keeps them keen.
No. 5
Make paying easier!
Simply put; the easier the better.
In this digital-thinking generation, everyone wants everything quickly and easily. This is the same with credit control. The easier you make it for customers, the more likely it is they will pay. And pay on time.
This can be achieved through methods of payment. Offer customers a greater variety of payment methods, such as credit card, direct debit and standing orders. Paying by cheque is traditional but unreliable and not particularly convenient for those who live a great distance from the nearest bank.
Just as paper invoices get lost in the mail (see no.2), so can cheques!
Here at the Credit Protection Association, we have not hesitated to adopt modern concepts. Our standing orders and direct debits have allowed our Members to pay discreetly and swiftly. We have also found they have fewer excuses not to!
Of course, if the customer is still not paying, we strongly encourage bringing in an external credit controller like us at The Credit Protection Association!