We’re well into the new financial year now, and many businesses would have reviewed their debt recovery processes and procedures, to ensure they maintain a healthy cash flow and minimise potential bad debts this year.
When we are winning new business, it’s great for our P&Ls, however if we don’t follow up on our invoices and get paid, it’s not great for our cash flow.
Do you need to review your credit terms or invoice frequency?
You may have standard credit terms that you offer your customers e.g. 30 days, however do your customers pay in line with these? Does the payment cycle work for the cash flow of your business?
It may be that you could think about having shorter terms, so that you are paid more quickly.
Similarly, you may wish to look at how frequently you invoice. If you invoice monthly, what would be the impact to your cash flow if you invoiced weekly?
The sooner you invoice, the sooner you will be paid.
Follow up your sales invoices
Follow up your customers by calling them to confirm delivery or satisfaction with the goods or services you have provided.
If there are any reasons that could give rise to a dispute, find out early and not when payment is overdue. The sooner you resolve any issues, the sooner you will be paid.
Stay close to your customers, give them no reason not to like you. Just like people buy from people they like, they pay the people they like.
And remember, those who shout loudest get paid first!
Do you need to review your terms of trade?
Do you have a clause in your terms & conditions that will allow you to recover your debt recovery costs back from your debtor in the event that they do not pay?
If you do incur costs, you want peace of mind that you can recover these as well as the debt.
There are many clauses that can assist in the speedy recovery of your debts, and help maintain a healthy cash flow. Read more here on the benefits of having customised terms and conditions for your business.