Chasing payments: it’s one of the biggest issues affecting SMEs, creating a chain reaction that can lead to the demise of many.
There are few things more frustrating when trying to run your business, but the fact remains that many SMEs will sooner or later run into a client that won’t pay on time or, worse still, won’t pay at all.
The service was delivered, the client was invoiced, the deadline came and went…
– Conduct due diligence. To put it bluntly, if you have gone into business with untrustworthy clients without conducting due diligence – don’t be surprised when things don’t go smoothly. Of course things aren’t always that simple, but if credit industry experts and consultants are available to help monitor clients and customers, ensure they’re on your team. Identify risky customers in order to make better credit decisions. If they fail to pay, registering a payment default on CreditorWatch will motivate them to do so, especially once their credit is stopped by their other suppliers. Revenue is the bloodline of business, so keep it pumping. Remember: your bottom line is the bottom line.
– Have Ts and Cs in place. Getting paid is an entitlement that you simply can’t risk going by the wayside. Let’s go to the worst possible scenario, shall we? They haven’t paid, you say they should, they say that for one reason or another they shouldn’t, you hit the courts, and here’s the kicker: the ruling goes their way simply because you failed to set the right terms and conditions. Gather the right individuals, preferably those with the necessary legal skills, lock in the terms and be sure that clients sign off on conditions beforeany sort of transaction goes down.
– Have a reminder system. Ensure you have a system in place that reminds you to remind others of upcoming payments. It’s easy to assume that a client will simply have their finances in order for when your payment deadline rolls by, but what if they don’t? Often you’ll be the one left having to start a frustrating chase process. Keep a system in place that prods clients about an upcoming deadline. Oftentimes it’s the only thing that stops them from putting your money elsewhere. It may sound exaggerated, but you should act as though everyone may forget to pay; you’ll make sure your prompts are delivered.
– Have the right contact info. SMEs are oftentimes so excited to get a new client, and a big-paying one at that, they simply fail to get the necessary contact information. Be sure to have adequate processes in place that determine the legitimacy of a client. The last thing you want to find when it’s time for them to pay is a phone number that leads to John Doe’s house in the Outback. If possible, get a primary contact, a secondary contact, a valid email, a credit card number, a license number, as much information to lock them in as legitimate clients. Another worst-case factor: if need be, this information will help authorities track fraudsters and non-payers down.