You’ve done the work and you’ve sent the invoice. 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 efficient in making collections have aligned their credit control processes with accounting software systems that support getting paid fast. 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 strong 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 can improve its business cash flow and get clients to pay faster.
Have a robust 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 and payment methods.
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?
Monitor your debtors
If your business can’t easily see debtors’ outstanding invoices or how much is owing or overdue to your business, it’s too easy for late payers to remain hidden and for your business to lose track of where the cash is hiding.
Review the accounts payable template to find out how your accounting platform or staff can map and track debtors. A bird’s eye view is the goal here.
CreditorWatch’s monitoring and alerts tools allow you to keep an eye on your customers 24/7 and be immediately alerted when any adverse changes to them occur.
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 with your debtors in time for their payment schedule? Every day that an invoice goes unpaid is money lost from your working capital.
Automate your 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).
Automate your payment system
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 a flexible payment option 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, heightening the action of an easy, healthy cash flow.
Automating the process also saves your accounts team valuable time.
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, cash flow management 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 this will generate a knock-on effect when it comes to them paying you on time.
CreditorWatch’s DebtorLogic tool can help improve the quality of your ledger.
DebtorLogic plays a pivotal role in helping businesses get paid faster by keeping their ledger in order. Firstly, it highlights and helps identify those businesses that are paying slowly or not at all and therefore makes it easier to avoid them. Secondly, it can be used to identify those businesses in your industry that are paying well. Those companies can then be approached by your sales team as prospective customers. This practice will help build a ledger of reliable customers over time.
Get in touch with our Customer Success Team on 1300 501 312 to discuss how we can help your business get paid faster.
