Our previous blog focused on the importance of obtaining complete details for your customers so that you know exactly who it is that you are doing business with.
This blog will focus on what you should do once you have all of those details.
Many businesses, particularly those that are struggling with cash flow, overlook some of the simplest debt prevention tools. One of the easiest ways to immediately improve cash flow is to design (or simply decide upon), implement and routinely use good billing practices.
Most modern financial management software packages, make it easy to issue invoices quickly and to deliver those invoices via multiple delivery methods.
Invoicing customers on a frequent basis for relatively small sums will encourage customers to pay and pay sooner. This approach also helps to identify slow payers and/or argumentative debtors.
An effective billing practice should not only include invoicing frequently, but also proactively following up invoices which are not paid within your standard terms of payment. That could be via automated follows through your financial management software or standardised emails that can be easily developed.
Businesses should not be shy about chasing up debtors. Those debtors have had the benefit of goods and/or services on credit and there is no reason why their businesses should continue to be funded by you once your invoices have gone outside of your trading terms.
The other matter that is regularly overlooked by businesses is making sure that it is easy for debtors to pay you. This means having plenty of payment options and making sure that your customers know about them – payment options should feature prominently on your invoices. With so many cheap payment options available in this day and age you should not limit the ways in which you can be paid.
If it is hard for your debtors to pay you, then don’t be surprised if you have a problem with bad debts.
Finally, don’t be scared to ask for a deposit, particularly if you are outlaying costs in connection with the goods and/or services that you are about to provide on credit. We recommend that the deposit taken should cover at least your costs of production.
Coleman Greig specialises in providing clarity and confidence to business operators in their legal relationships. If you have a query relating to any of the information in this piece, or you would like to speak with a lawyer in Coleman Greig’s CGCollect Debt Recovery team, please don’t hesitate to get in touch today.
