For any business, the turning of the year represents an opportunity to adopt new practices and procedures.
The UK Debt Collection News Team has compiled what we think are the must have New Years resolutions for all based upon on 150 years plus of credit control and debt recovery experience.
A company’s sales ledger is possibly a firms most important yet troublesome assets. Fail to pay it constant attention and (dependant on the size of your ledger), within days it can start to affect your cash flow.
It is one of the most frustrating aspects of business that many customers will no pay their accounts or invoices without a reminder. The harsh truth is that over the course of the financial year, a minority will have the intent not to pay you anything at all.
Chasing Debts can feel like a fruitless task given the hard work of actually attracting the custom in the first place has been completed. Then, following the supply of goods and/or services, it is natural to expect payment however as we all know that is not always the case.
An effective credit control system will ensure you maximise your company’s cash flow combined with a disciplined approach.
There is are no short cuts to successful credit control however there are certain steps you can put into practice to ensure you maximise your cash flow and get paid on time.
Our 7 top tips!
- Expect late payment – It is a harsh reality of business that very few companies actually pay their outstanding accounts/debts on time. Assume that each invoice will become overdue as this prepares you for the reality. This will also encourage you to ensure you have the right strategies in place to deal with such.
- Send invoices asap – The earlier you send your invoice for payment, the sooner you will get paid. Sounds like a no brainer and it is however there is no room for lethargy in this situation.
- Credit check & monitor – Just because your customer passed your credit checking procedure in 2012, they might not pass that same check today!
- Make rules and stick to them – Set the ground rules from outset and make them very clear to your customers. Avoids any ambiguity.
- Be authoritative – Some businesses are reluctant to ask for payments that are overdue? Why? For fear of losing them as a customer? – How many suppliers have you stopped using because they wanted to have their invoice paid on time! Do you really want customers that do not pay anyway?! A polite but firm approach when requesting payment is sensible.
- Pro active payment reminders – A pragmatic credit controller will not wait for an invoice to become overdue before phoning the customer, they will call a couple of days before.
- Will not pay whatever we do – Whatever you do, do not ‘write off’ a debt unless it is literally pennies. There should always be a recourse for non paying customers whether it is a Professional & Commercial Debt Collection Agency such as Federal Management or where the debt is heavily disputed, a list of reputable commercial lawyers can be at the law society’s website, here.
So there you have it. Our top seven gems of advice to keeping your cash flow in check.
It really does pay to review your credit control strategy heading into 2017! Learn from 2016, pains from the past can mean profit for the future.