Payments are vital for the smooth running of your business. We strive to attract customers for our goods and services by dynamic sales and marketing activities. We pride ourselves on producing attractive offerings at prices that are affordable to our target market. We aim to deliver high quality goods and services to our customers which give them satisfaction, enhance our reputation and hopefully attract them back and/or refer us to their contacts.
So why do so many of us fail at ensuring we receive payments on time when we get around to invoicing for these goods and services? This can be so damaging for our cashflow – often a vital area for most small businesses.
Here are eight tips to help you receive the money you deserve when you expect it:
1. Before you supply goods, make sure the customer has agreed to your terms in writing.
This will mean there are no crossed wires. We won’t have the situation that the sales rep thinks they have agreed to payments within 30 days, but the customer thinks it is due 30 days from the end of the month following delivery!
Make sure you spell out the terms when you confirm the deal and not after the goods have been delivered.
2. If You Supply Goods Make Sure You Get A Signed Delivery Note.
By getting a signature from your customer it gives you confidence that they have accepted the product and if they also sign that it was delivered in a satisfactory condition they cannot use the excuse of faulty goods to delay payments.
Also make sure the signature is dated.
3. Raise The Invoice And Send It As Soon As You Can After Delivery Of The Goods Or Services. Ideally, Ship Them Both at the Same Time.
Remember until an invoice is raised, your customer can’t do anything with it!
The payments process will only start once your invoice has been raised and received by your customer.
Ask yourself could you get your suppliers to pay in advance?
Never fall into the trap if raising invoices monthly.
4. Seven Days After the Invoice Has Been Dispatched, Ring Your Customer to Make Certain That There Are No Problems and That the Invoice Has Been Passed To Accounts for Payment
By calling to ask how things are, it gives you the opportunity to quickly sort out any problems that have arisen and still be paid on time.
This will also have the added benefit of establishing if there are issues with other areas of your organisation such as despatch or sales where customer expectations are not being met.
The results will be happier customers who will buy more from you; greater sales which will result in more cash flowing through the business and potentially your profits will also increase.
5. Always Send Out Statements to All Outstanding Accounts
Many companies only make payments on statements – usually the ones where their purchase ledger is a mess!
If so play by their rules and keep building your the relationship with them to get payment quicker.
6. Seven days after the due date, phone the debtor and explain that legal action will be taken if payments are not made
Make this call!
Remind your customer of your terms of trading to which they agreed and warn them if payment doesn’t come within seven days, you won’t be able to stop the commencement of legal action.
7. Seven Days After That, Fill Out a Writ on a Money Claims Form and Fax It Over, With a Note Saying That If Payments Are Not Received With 14 Days, This Form Will Be Filed With the Small Claims Court
Now your customer will more than likely react straight away and remember all you are doing is nothing more than sticking to your agreed terms of trade and showing you intend to get paid for your invoices.
You don’t have to use a solicitor or go to court to do this.
8. If no payment is made, file the writ
You must file the writ if there is no payment
You can do this on line
If there are still no payments – take it out of your cash flow – write it off! You don’t want to pay tax on income you have not received!