Credit Control Gets You Paid
The saying “Cash is King” is an important one to remember. Of course, time and effort needs to be spent on selling goods and services but if you don’t receive the payment it will all have been a waste of time and money.
By setting aside a regular time each week to find out which customers haven’t paid by the agreed date and contacting them to find out why, you increase the chance of cash flowing into your bank account when you expect it too.
By allowing some or all of your customers to buy on credit (issuing an invoice when they purchase a product or service which is to be paid several weeks later), you are putting a large amount of trust in the unknown. It is advisable to run a credit check on new customers before allowing them to buy on credit. This service is offered by many companies (search on the internet or ask for recommendations). The fees involved can save large amounts of time and money in the future.
The first stage to getting paid on time is to let your customers know your terms of payment before you issue credit and make sure it is stated clearly on your sales invoices. Most companies assume the terms of payment are 30 days unless you let them know otherwise.
Also make paying your invoice easy by having your bank account details showing clearly for online payments along with details of to whom a cheque should be made payable to and the address of where to send it. For some customers it might be worth including a stamped addressed envelope for cheque payment.
As soon as a sales invoice is issued it should be stored electronically or as paper in a file labelled “Sales Unpaid” (or similar). File the invoices in order of payment due date. At a regular time each week, so that it becomes a habit, set aside time to go through this file. Any overdue invoices should be at the front of the file. It is a good idea to have all your customer contact details to hand before you start. Aim to speak to a relevant person by phone.
When you get through to the correct person, state why you are phoning; an overdue invoice and when it was due for payment. During the conversation make sure you ask when you can expect to receive payment. Make a note on the paper or electronic invoice, of the date you phoned, who you spoke to and how and when they are sending the payment. The invoice can now be filed according to the new expected payment date.
It is important to remember that you are entitled to be asking for the money. You both entered an agreement. You fulfilled your part by supplying the goods or services and it is time for the customer to fulfil theirs.
If you can’t get through to the person who can issue or authorise payment, find out when you can contact them. Again, make notes on the invoice and file according to the day you’ve been told to make contact. Also make a note for yourself in your diary to contact this person, so that it doesn’t get left for another week.
If you find out that you’ve not been paid for a reason; a credit invoice should have been raised for goods returned, the information on the original invoice is not correct, for example, make notes and get these things corrected straight away so that payment isn’t delayed any longer. Do everything you can to get the money into your bank account as quickly as possible.
- Set aside a non-negotiable time every week.
- Have all the overdue invoices and contact details to hand before you start.
- Do everything you can to get money into your bank as quickly as possible.
Aug 22, 2014