4 Quick Tips To Get Paid Promptly
As a small to medium business, managing your debtors is critical. To continually receive payment for services/ products upfront would be ideal, this unfortunately is not always practical especially with business to business transactions. Unpaid debts can have a huge effect on your cash flow and can interrupt your business when you don’t have the financial room to move forward.
Here are 4 quick tips to keep your business debtors in line:
1. Perform a credit check
This can be as simple as checking with another supplier that does business with your potential customer to see that their invoices are paid on time; however larger jobs should have signed contracts completed prior to the commencement of work. These should include confirmation that the applicant has read and understood all terms and conditions and agrees to abide by them, details of all owners in the business and at least 3 trade credit references.
2. Invoice immediately
The longer you wait to raise the invoice, the longer you wait for payment. Ensure you have the contact information of the bookkeeper/ financial officer and know where to send the invoice. Include any purchase order numbers or other required details to avoid any delays in processing. It is also imperative that your terms and payment expectations be clearly defined on your invoice.
3. Automate/ systemise your collection and follow-up process
Make it easy for customers to pay you and make it easy for yourself to remind them when. For example, Xero has an online invoicing feature including a “pay now” button for simple credit card payments. Plus using add-on programs such as Debtor Daddy will allow you to schedule and automate email reminders prior to the due date and if /when overdue. This can be an effective and valuable tool in managing longer payment terms to ensure that your business is front of mind with your customers.
4. Communication is Key
While communication may seem like an obvious part of the invoicing process, it is greatly underutilised especially by many trade businesses. Maintaining communication early and often with your suppliers and customers, will alleviate potential stressful and high-pressure situations in the future. Communicating frequently may also open your eyes to any financial challenges that your customers/suppliers may be facing, and together you can take immediate action and implement strategies to ensure full payment of invoices i.e. payment plans etc.
Contact the PROTRADE United team for further information and to discuss strategies to best support you and your business.