Every business has experienced it… you spend your time doing the best job for your client, you make sure the service is the best you can give them, the product does exactly what they need it to do, you deliver on time, at good value for money… and then you wait for payment … and wait… and wait! This can put extra pressure on your business. As the economic downturn starts to bite, we hope the undernoted 10 top tips on payment chasing may be beneficial to you:-
ALWAYS CHASE LATE PAYERS
It is vital you make sure those who delay payment are reminded about it until they do pay up. You should try not to set a precedent by allowing certain clients or suppliers to become persistent late payers by attempting to ensure prompt payment from all. Remember you are not begging for a handout – you are entitled to the money by the agreed time!
BE PROMPT IN CHASING
You have provided the service or product! (The longer you leave it to chase your money, the further down the queue you will go when any supplier cheques do get written out!)
HAVE SYSTEMS IN PLACE TO CHASE FOR PAYMENT
It may sound simple but many small businesses do not have any systems in place to chase late payments. By making sure you have an effective system in place, with monthly statements, you can ensure that all outstanding invoices are paid as quickly as possible and those that still don’t pay up are pursued until they do.
MAKE SURE THE RIGHT PERSON CHASES LATE PAYMENT
Management time spent chasing late payment rather than growing the wealth of the business can sometimes be counterproductive. By making someone else responsible for this activity, you can ensure that it will always be done and that it can be factored into their time rather than falling to the busy schedule of the owner or manager.
ASSESS THE IMPACT
Assess the impact of a late payment straight away so you can work out how to deal with it and the impact it will have on your cash flow going forward.
GET TO KNOW YOUR CUSTOMERS
Run a credit check on any new customers. It might sound a little underhand but it could save you a lot of time and money in the long-run! A wide range of credit check services and software packages are available online. Remember periodically it may also be prudent to credit check existing customers, particularly in respect of increased ordering patterns accompanied by frequent late payments.
DON’T BE YOUR CUSTOMER’S BANK
Make sure you set the ground rules for payment early on and make sure these are enforced for all clients. Your credit terms should be clearly stated on all invoices so that your customers are aware. You should also have contracts from all your customers agreeing to these terms and conditions.
DON’T LET IT GROW
If your client or customer won’t pay the outstanding debt, don’t let it grow. Stop supplying any further goods or services. If your product or service is important to your customer, it might be enough to persuade them to settle the liability.
Make sure you are aware of any reasons for late payment, particularly when it comes to regular customers – make a judgement call on whether it is worth upsetting a regular customer who has fallen a few days behind on a payment for the first time. However, if you find a usually punctual payer begins to fall behind on payments this could be an indication of financial difficulties for their business.
DON’T BACK DOWN
be prepared to state your case to the top man or woman!