Getting clever about getting paid
Sam O'Hara, credit control expert at Page Kirk, gives some handy tips for receiving payment for the money your business is owed.
The most powerful credit control tool is you. You need to believe in yourself and your business. Not everyone has the skills to successfully perform credit control, so make sure the person responsible has the necessary skills to do the job effectively.
Don't let clients walk all over you. Be firm, not aggressive, as you don't want to damage any relationships you may have built up.
Credit control requires dedication, persistence and, ultimately, a lot of hard work. You need to be consistent from the start and not slack off. Whilst credit management isn't always easy, if you continually work hard, you will see the rewards.
The most important aim for a credit controller is getting paid on time. Making contact to ask for payment is not rude. You have done the work, hopefully the client is happy, so you are now entitled to be paid on time for the work completed.
Payment terms are normally 14 days. Clients should be made aware of this from the very beginning. Some may ask for 30 days or even 60 if the company is larger. You can always ask for a part payment up front if the amount is very large.
Check to see if your client has received the invoice and is happy, as this can stop any potential delays. Make regular courtesy calls to check that you and the client are happy. By doing this, you'll give yourself time to settle any disagreements before payment is due, limiting the risk of late payments or queries.
Sending invoices quickly can speed up the payment process. It's obviously important to make sure the invoice is addressed to the correct person, as sending it to the wrong contact or place can delay payments coming into you. Any mistakes, big or small, can lead to delays and other companies' invoices moving ahead of yours.
To make the payment process even faster, try emailing the invoice or using a portal rather than posting it. This way, it can be tracked and resent if need be.
Tackle late payments straight away with a zero-tolerance approach. But remember, there can be cases where clients have simply forgotten. If a payment isn't taken there and then, agree a payment date. A gentle reminder a few days afterwards should be fine.
Warn your clients of possible further action if payments are not received. You may choose to charge late payment interest, take legal action or pass to a debt collection agency, but any of these options must be included within your terms and conditions. They should always be the last resort though. You must make sure you have done all you can to try and get payment in and solved any queries the client may have had.
It may sound obvious, but include multiple payment methods, so it is easier for your clients to pay their outstanding invoice/invoices. All this information should again be clearly printed on your invoice.
Build a relationship with your clients. Some people see credit control as a negative, but this is totally incorrect. Say thank you when payment is made on time, this will go a long way and they will remember that.
The older the invoice gets, the harder is it to chase, so make sure all calls, emails and letters are logged, as this information could be needed if taken to court.
If the same client continues to be a late payer, then stop any further work until the account is paid in full or ask for part payment before any work is completed.
Whilst not all companies have a credit control person or team, every business wants a healthy cash flow.
Our business advisory team can advise on business solutions, such has the best accountancy software or apps to use for invoicing or to determine if it is viable to outsource payroll or hire in house. We can help you to grow, so do contact us for more information by calling 0115 955 5500 or emailing enquiries@pagekirk.co.uk.