One of the biggest problems small businesses face is trying to collect payment after the work has been done. If late payers are crippling your business there are some effective strategies you could follow that will help you to collect more monies in timely fashion.
Be Clear from Day One
Right from the beginning you should be clear about how and when you expect to get paid. Agree payment terms verbally with the buyer at the beginning. It is then a good idea to give all quotes in writing and make it clear again what your payment terms are on the front of the quote just below your price. Remember to attach a copy of your full terms and conditions with all quotes or better still print it on the back.
Before You Supply Any Goods
Carry out a credit check on your potential customer before you even think of supplying them. You should also carry out an annual check on your existing customers just in case their financial situation has changed for the worse.
At Point of Delivery
Check if your goods delivered or services supplied were satisfactory. There is absolutely no point in delaying any potential complaints. If the customer is unhappy try and resolve any outstanding issues immediately. If any goods were damaged uplift them and issue any credit notes quickly.
Email & Post all Invoices
As soon as the goods are supplied or the work has been completed email a copy of the invoice directly to your contact in the finance department and stick a hard copy in the post. If you only send invoices by post then you are at the mercy of the post office and your customers might use the excuse that they never received it!
Print Your Bank Details on the Invoice
This will allow your suppliers to pay you online. Often the reason why some customers are late in paying is that they are just too busy to sign a cheque and post it. Do not worry about fraud as there is very little anybody can do with just your sort code and bank account number.
Don t be Timid
Once payment is due, phone and immediately ask for payment. Try and get any further excuses for non payment out in the open at this stage so that you can proactively deal with them.
If All Else Fails
Have clear plans in place and start the process rolling as soon as payment is overdue by thirty days. A good idea is to take a step back from the process and get your legal agent to send out a demand letter with threats of further costs and interest charges.
Persistent Late Payers
If businesses constantly flaunt your payment terms you have to decide if they are worth all the trouble of supplying them in the first place. If you still insist on doing business with them then perhaps it is now a good idea to think about increasing your profit margins or supplying them with cheaper more inferior products at the same price.
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