Running a business comes with a lot of energy sapping issues and none more so than ensuring your customers pay on time. Dealing with Clients, dealing with Suppliers, making sure the accounts are in order, making sure you have ordered enough caviar. The list is endless! All of that can be worthwhile if you get the cashflow side of things correct. That is where the main stress of running a business lies. If you are being paid, and being paid on time, you can put up with most other headaches.
Cashflow is everything when it comes to running a business. It means we can pay our employees, pay for products to then sell on and everyone will agree, the main reason we operate businesses in the first place.
It is imperative we have the correct systems and processes in place. It is the duty of the business to send Invoices on time, follow up on missed payment dates and ensure cashflow is not becoming a bigger issue than it needs to be. In Ireland, there can be a late payment culture in certain industries. The Construction industry is one that is notorious for delaying payments. Today we will provide some tips on how to overcome this and improve your Debt Collection.
1. Send Invoices Out to Ensure Your Customers Pay On Time
Simple one to start with but often overlooked. Get your Invoices out on time. You would not beleive the amount of business we speak to that send Invooices 2-3 months down the line. A recent reason given was “It is money for a rainy day, like sitting in a savings account”. NO NO NO! The longer a debt remains unpaid, the less likely it is to get paid. The funds are much better off in your account than any other bank account, even if you do not need to use the funds straight away.
And here is the reality: the longer a debt remains unpaid, the more that can go wrong. The company may fold, enter into liquidation, the person might fallinto financial difficulty or even become bankrupt. Then it is too late.
Send your Invoices on time!
In any regard, if I wasn’t invoiced on time, I would think it unprofessional and unusual. Send out your Invoices and get them paid!
Small Tip: Using online E-Invoicing services like Xero make this much easier.
2. Keep your Lines of Communication Open
Try and build good relationships with your customers. This ensures you know different people in the firm, feel ok calling and emailing them. Take your clients out for a coffee, or a beer.
This also ensure your Invoice will be top of their list. People are much more likely to pay people they know.
Small Tip: Send Christmas Cards to good clients
3. Have Adequate Terms and Conditions
This comes back to a previous article i wrote about ensuring you get your clients details upfront. A well structured set of Terms and Conditions can assist you in getting paid on time. Nothing makes a customer pay on time more than when they know there will be monetary consequences for not paying on time.
Ensure to include clauses for late payment interest, and more importantly, ensure you have a clause included that ensures Debt Collection costs can be added to the debt should the matter need to be sent to a company like Taylor Ryan Recoveries.
Small Tip: Creating Terms and Conditions does not need to be expensive or complicated. The main points you need to include in your Terms and Conditions would be:
- A Personal Guarantee
- A Debt Recovery costs clause
- Security Clauses
4. Reward Prompt Payment
If payments are made on time, you can also reward this. You can offer discounts. If small discounts are not an option, you can always offer some other form of incentive, e.g. extra product, a little add on to the Service. Make sure you let your clients kow this is not included in the original balance but a small thank you. SING THIS FROM THE ROOFTOPS! This will also build your relationship with your clients in the long term.
Summary
It’s tough out there. Hopefully these tips will assist you with your cashflow and keep on top of overdue accounts. If you have any further questions or need extra assistance, feel free to Contact Us