Credit Control Tips
August 15, 2010
It’s something every business has to face sooner or later: what to do when customers pay late, or not at all. However, a good system of credit control will help safeguard your business from the menace of late payers.
Make your terms clear
Agree payment terms at the order stage and have those terms printed on relevant documents such as invoices. Terms should include any credit period and details of interest charges on overdue accounts. Don’t forget all businesses have a legal right to claim interest from late-paying customers.
Make your invoice clear
An easy-to-understand invoice will encourage customers to pay more quickly. Make sure, in particular, that you include a detailed description of the goods/services, a reference to the order number and that you send the invoice to the right person. Bank account details on invoices and statements are another way of making payments easier for your customer.
Invoice on time
Send the invoice out immediately after the goods are sent or the service is completed. Don’t forget that many businesses simply don’t pay invoices until they receive a statement.
Create a system
Set out in writing a timetable you feel comfortable with for chasing unpaid bills – and stick to it. Set reminders in your calendar so credit control is part of your working day. Consider sending emails as opposed to letters and texts to mobiles, both forms of communication are ‘person to person’ and instant.
Chase outstanding bills ASAP
This is perhaps the most important tip of all. Always concentrate on the largest debts first, customers you suspect maybe in financial trouble and older accounts. Keep a log of your calls – the date, time, who you spoke with and what was discussed. Do not be embarrassed about requesting payment – never forget it is your money. Phoning is one of the fastest ways to persuade late payers to pay up – but never call on Monday or Friday. Build a relationship with the accounts clerk and never be rude or lose your temper.
Deal with excuses
Always be sceptical of excuses – they can often be simple delaying tactics. Put these customers high on your chasing list. Have a standard policy on dealing with common excuses, for example:
· “I haven’t received your invoice” – send another copy by fax/email to the person you spoke to and phone to check it has been received and when you can expect payment.
· “I’ll deal with it shortly” – ask when it will be dealt with exactly
· “The cheque’s in the post” – ask for the cheque number and postal date. Check the invoice address is correct
Follow Up on Promises
If a payment has not been made by the date promised, follow up quickly and by phone. Keep your company at the top of your customer’s ‘to pay’ list.
If your customer doesn’t have the money to pay their account in full, arrange a payment schedule that they can afford. This way you are being paid some money and automatic payments will be paid ahead of other creditors in the queue.
It’s good to talk
Maintain a positive and personal relationship with your customers. You are more likely to get the results you want if you adopt a friendly approach. Explain that you value their business and have been advised to take legal action, but only want to do so if there is no alternative. Speak to the managing director or finance director of the business, or another decision maker if possible.
Finally, thank customers who pay on time.
If you simply don’t have the time to do your own credit control, but would rather retain that personal service rather than call in the big guns, email me today – I can help!