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How to get paid quicker without it costing you a penny

How to get paid quicker without it costing you a penny

Whilst the economy growing, albeit at a slower rate than we would hope for, business in general is pretty good. However, if your clients fail to pay you on time then it can make things difficult and can put undue pressure on your cash flow. There are several measures you implement that have little or no cost implications that could help to keep your business flourishing and the cash coming in.

  • Credit Application Form – It is important to have all your new customers complete a customer credit form. Ensuring you have the correct billing details may seem obvious but it is now unknown for your accounts department to be told or assume the wrong address. It also allows you to credit check the business and collect trade references on your customers.
  • Always Call After You Send an Invoice – Everyone who works in finance knows the most common excuse for non-payment of accounts is that the “invoice” was not received. Rather than wait for 30 days before someone in your customers’ accounts department is confronted with this, give them a call and make sure it is received and it has been put on their purchase ledger.
  • Confirm What Date the Payment Run is On – To ensure you accurately predict your expected payments, it is important to understand your customers payment cycle. Some companies will only pay invoices one a month, therefore you can be more accurate when predicting the date, you will receive payment from your customer if you know what date they usually pay on.
  • Call to Re-Confirm the Payment Date – A well-known phrase within credit control departments is that if “you don’t ask you don’t get”. Lots of companies will only pay people who ask and continue to ask for payment. Don’t wait till the invoice is overdue, pre-empt payment by giving your customer a quick call a few days before it is due to confirm it will be on the payment run.
  • Follow Up – 2 to 5 Days after your payment is due chase by Email and Telephone – If after all this a payment has not made on the required date then you should send a reminder email regarding the payment and also place a telephone call into the customer to ascertain what happened
  • Follow Up – 21 Days after your payment is due chase again by Email and Telephone – A further reminder should be sent outlining the due day and how long it is now overdue. With this you should also provide a statement of account to highlight other invoices that may also become due in the coming weeks or that have not been paid.
  • Final Follow Up – Email and Telephone Final Notice 30+ Days after the Payment Due Date – This will have been at least your 4th phone call made to your customer regarding your invoices. This will ensure you have made several attempts to recover your payment and you should now feel comfortable with seeking the help of a third-party debt recovery company or eventually the courts if necessary.
  • Final Stage – Pass it onto a Debt Recovery Company – When you have exhausted all your internal resources you should now look at a third-party debt recovery company. When choosing a commercial debt recovery partner always check they do not charge any upfront fees*. Always ensure there is a clear fee structure and any ancillary costs are only added when you have pre-approved them. Employing a debt recovery company should be simple. Debts are typically actioned within the hour – This is when your customer is emailed with the appropriate and relevant notice. Your customer will then be notified that a third party company has been appointed by you to recover the debt. They will be advised of all charges and costs which will be added to the debts under the “Late Payment of Commercial Debts (Interest) Act 1998” to recover – interest, compensation and reasonable costs. Your debt recovery partner should make all attempts to recover your money as quickly as possible. They should also try to secure payment of all your costs from your customer. This way the debt recovery service is free of charge for you. A typical timescale for a non-disputed debt is 16 days.

There are lots of preventative measures and good practices you can adopt to help ensure you get paid and get paid quicker. This way you will gain more control of your sales ledger. To discuss any of these items in more detail or for free general credit management advice, then please give us a call on 01698 821 468 or email us at [email protected]

*International debts may incur a nominal retainer fee.

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