Protect your cash flow and get paid faster
You’ve done the work, you’ve invoiced. Now you wait. Every business owner knows the challenge of getting debtors to pay on time. But is there more you can do to get paid faster when businesses stall?
Put simply, yes. Businesses that are effective in making collections have aligned their credit control protocols with systems that support getting paid. And getting paid on time is not solely the domain of big enterprises. Savvy small and medium businesses are getting the gist of this, too.
Underpinning any business with healthy accounts receivables are two key pillars: a driving belief that they’ve earned the right to be paid on time, and a proactive approach to debtor management.
Review these seven aspects of your accounts receivables management to see where your business has the opportunity to improve and get clients to pay faster.
Credit policy
Document and disseminate how your company determines credit worthiness, terms and conditions for credit sales, debtor management tools and procedures, credit hold procedures, staff responsibilities etc.
If your credit policy is loose or incomplete, it’s a sign you have holes which problematic debtors can slip through. Do you research a new customer’s credit transaction history before offering credit terms? Is your sales team aligned with your company’s credit policy?
High visibility of debtors
If your business can’t easily see debtors or how much is owing or overdue to your business—and by easily, I mean in seconds—it’s too easy for late payers to stay hidden and for your business to lose track of where the cash is hiding.
Review how your accounting platform or staff are able to map and track debtors. A bird’s eye view is the goal here.
Invoice immediately, without errors
It’s not enough to get your invoice out quickly; it needs to be correct, without omissions. Do you know who to send your invoice to? Will your invoice arrive at your debtors in time for their payment schedule? Every day that an invoice goes unpaid is money lost from your working capital.
Consistently persist with follow-up reminders
Systematically send reminders: one, two, three or more if you have to. Send emails, texts or pick up the phone and make a call. This can be a time-intensive job (and frankly, one of the most hated tasks in accounts receivables) so think about resourcing this with technology and automation so you can be sure you reach every overdue debtor (not just the big ones on the top of the list).
Collect money online
This is the digital age, and increasingly, the mobile age. Your customers will have expectations of transacting with you online. Install an online payments gateway so your customer has the flexibility to pay you with a credit or debit card.
The added benefit of having a payments gateway is you can add ‘Pay Now’ buttons to your invoices, statements and emails, so your customer is one-click away from depositing money into your bank account.
Call in the experts
Too often, a business will stall in the latter stages of following-up debtors, simply because they don’t know what to do next. Enacting debt collection and legal services doesn’t mean you and your customer end up in court; this can be a simple action of a third party agency sending a letter of demand. It’s inexpensive and keeps you moving towards cash recovery.
Invest in customer relationships
Even a simple ‘thank you for payment’ email shows your customer you are on top of your accounts and appreciate their business.
Small actions like checking your customer’s satisfaction and remembering their milestones with your business deepens the trust and connection you share, and you should expect this to generate a knock-on effect when it comes to paying you. Learn more in this blog post.
Backing your business to get fast is within your power. What more could your business do if you had the cash and confidence to get on with making your business great?
About the Author
Aj Singh is Co-founder and Managing Director of ezyCollect, automation software for debtor management. ezyCollect also integrates with third party services in credit control, finance, legal and debt collection. For more information, go to www.ezycollect.com.au
