Getting paid on time is a problem for many SMEs and owner-managed businesses. Implementing a credit control policy can help, says Teresa Campbell.
Most of us don’t like asking for money but getting paid on time is important. Late payments will impact your business’s cashflow and can cause serious problems if they are not addressed. Here are some strategies you can use to help you collect the money you are owed:
• Know your customer. Make sure that you have correct and up to date contact information for your customers and that you know who to send invoices to.
• Agree terms and conditions with your customers to avoid misunderstandings.
• Invoice promptly and make sure that your invoices include all of the information that your customer will need — e.g. Purchase order numbers and details of the goods and services provided.
• If you find that you are falling behind with administration, consider using a cloud-based invoicing system. Many of these systems now have mobile apps that allow you to raise invoices on the go.
• Know your customers’ payment cycles. If a customer does a cheque run once a month, keep this in mind as will have an impact on when you receive payment.
• Have a process for chasing invoices such as following up after 30 days. Be consistent in how you implement this process.
• Keep debts under review and watch out for potential problems like a previous good payer who suddenly starts to miss payments.
• Consider charging interest on late payments.
As your business develops and grows, you may need more support to keep on top of your accounts and debtor control. While not every business can afford to maintain a dedicated in-house accounts team, real-time accounting solutions and outsourcing are cost-effective alternatives which can help ensure your business gets paid on time. For more information or advice on specific problems, please contact a member of our team.
Teresa Campbell l Director