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5 key steps to recover EOFY unpaid invoices

With the end of the financial year looming, now is the time for businesses to clean up any outstanding payments. Here are some tips to smooth out the process and improve your cashflow.

 1. Communicate clearly with debtors

5 key steps to recover EOFY unpaid invoices

If you expect your customers to be disciplined with payments, it helps if you are meticulous with your invoicing too. As the end of the financial year nears, remind your customers of any invoices that have not been paid and ensure you have all invoices for each customer on the one statement. Email this to them and allow an appropriate time for payment, depending on your payment terms. Do not omit important details such as the amount owed, the payment due date, their terms of trade and the client’s payment history. When you provide this level of information, there can be no excuses from slow-paying clients.

2. Get on the phone and request payment

Never be afraid to call your clients if invoices are unpaid. Ultimately, they should appreciate a courteous, personal approach rather than an impersonal email, and hopefully it will prompt them to pay. Remember that payment is more likely if you can accept credit card payments over the phone while you are talking to them. However, cold calling still requires preparation. Before making the call, ensure you have all the relevant customer information in hand so you can speak authoritatively with customers and avoid having to get back to them with any information before payment can proceed. If the customer is having legitimate cash-flow issues, you could suggest making a partial payment on the spot, and arranging a payment plan for the balance.

 3. Engage with clients if there is a payment dispute

Inevitably, there will be times when a client disputes your invoices. Rather than putting such cases in the too-hard basket or ignoring the issue, quickly find out exactly what the problem is and work with them to resolve the issue. Being upfront usually results in faster payments, and it also enables you to develop trust with your client.

4. Make it easy for debtors

The harder you make it to pay, the slower payments are likely to be. So simplify invoicing for your clients by providing clear banking and credit card details on your invoices. Let them pay their invoices on your website, too, or through other online platforms as many people now prefer to make payments simply and at a time that suits them.

 5. Call in the experts

If you still don’t get paid, contact us to help you. Outsourcing your payment problems allows you to get back to running your business while we address your issues with debtors.

For more information, contact us on 03 9629 8777 or collect@kearleylewis.com.au.

Cash Flow Checklist

Cash Flow Checklist

When the holidays are over and we return to work, one of the first things we need to get on top of is the status of our accounts receivable.

Whether you’ve been really busy or closed over the holidays, this will inevitably be on your ‘to do’ list.

For many businesses, getting through the holidays and keeping the bank balance positive has taken some work. Some won’t have been so fortunate and need to collect their unpaid invoices … yesterday!

Then there’s the businesses who have been so busy over the holidays that they need to catch up on their invoicing and administration. Sales have been great, however now the cash needs to be collected.

Cash Flow Checklist

Here’s a handy checklist to run through in the new year, to assist in prioritising the tasks when you’re working on your cash flow.

1. Ensure orders are completed & invoiced promptly

Firstly, invoice for the orders that have been completed. Make sure any orders that have not yet been fulfilled are completed promptly, so you can invoice for these also.

2. Ensure Invoice Queries Are Resolved

Get onto any invoices queries straight away, the sooner they can be authorised, the sooner they will be paid.

3. Follow Up Outstanding Invoices

Start contacting your overdue customers. You will soon get a handle on who is back at work, so be first in best dressed, and have your invoices pushed to the top of the pile for payment.

4. Send Reminders

Send customers advance reminders of when payments are due.

5. Can your sales team assist you?

For many industries, January can be the time when the sales team are encouraged to take annual leave. Can any of your sales team who are back at work assist with chasing up overdue accounts for you? These colleagues may have some good relationships that they can reach out to, and assist in getting a commitment to pay.

6. Can you assist the sales team?

It may be really useful to assist the sales team in generating new sales at this time of year. They may be grateful for a list of historical sales by customer from you to see which customers were ordering last year.

7. Review your credit limits

Are there any customers who have reached their credit limit with you? Think about whether you need to review these and ask for payment up front or a deposit invoice instead of extending further credit.

8. Make It Really Easy For Customers To Pay

Have all payment options on the face of your invoices, and think about what an early settlement discount could do for your cash flow if you offered it for payment before the end of January.

We Can Help

Remember, when we chase your customers for payment, we ask them to pay you directly, meaning your bank balance gets an immediate boost.

If you need a hand chasing up unpaid accounts, send them to us as soon as you can, so we can work on them for you.

Let’s follow up those slow payers and get your cash flow flowing again! Call us on 03 9629 8777.

Healthy cash flow

heathy cash flow

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.

Ensure your business is protected with customised terms and conditions

Here’s a question to ponder: does your business have customised terms and conditions?

If you are like many other business owners, the response is likely to be along the lines of “Umm, not sure”, or “we haven’t got around to that yet.” The truth is that updating T&Cs is one of those tasks businesses often put on the backburner – and it can be costly.

Even if they were drafted in recent years, it is important to know when you will next conduct a review to ensure any new legislation is factored in.

Sure, you may be running a successful business and be one of the lucky ones that have avoided payment disputes, but drafting or reviewing T&Cs is an important part of any business’s operations. It also provides peace of mind, so put it on your to-do list.

The case for Terms & Conditions

They can protect the thing that keeps most business owners awake at night – cash flow. Without them, businesses can end up spending a significant amount of time chasing unpaid debts and resolving disputes – or, worse still, writing off bad debts because nothing was agreed in writing.

They remove uncertainty if a dispute does occur. Yes, a handshake agreement with customers sounds nice, but in the absence of written terms and conditions you risk uncertainty and misunderstandings. Clear terms leave little wriggle room for customers who try to go back on their word.

Sound T&Cs are valuable for a business in the event of having to chase payments through a debt collection agency or when they need to engage a lawyer; they can also assist when seeking to recover costs.

Mutual benefits

It is important to note that terms and conditions protect both parties and clarify a trading relationship.

Remember, though, that terms should be customised for your business. Copying someone else’s T&Cs is risky because they may not have consulted a lawyer themselves. Each business will inevitability have different forces at play.

Help at hand

The good news is that we can help you. Our lawyers can review or prepare a customised set of terms and conditions, to improve your ability to successfully follow up on unpaid accounts.

Don’t forget – laws change, as does the way you trade with your customers. Check your T&Cs and sleep soundly!

Debtor Management & cash flow solutions

Cash flow is the most important part of any business. Without it you simply cannot operate. One of the biggest hurdles with debtor management is ensuring your debtors pay you in a timely manner.

Cash Flow Finance, or Invoice Finance as it is also known, can speed up the cash flow of a business if it sells to other businesses.

How it works

Invoice finance is where a business’s accounts receivable ledger, (or part thereof) can be used as collateral against obtaining finance. The debtors ledger is sent to the finance company and they can remit funds to the business. The amount of the ledger which is financed varies depending on the debtors involved. When debtors begin paying the invoices, this repays the finance company.

Benefits of the solution

Kearley Lewis works with a handful of reputable invoice finance providers. The benefits of using an invoice finance company are:

·         You speed up your cash flow and get paid more quickly by your debtors

·         You can reduce your chances of having bad debts

·         You can obtain finance without providing real estate as security

·         Your costs for finance can be factored into your pricing

·         You can obtain debtor insurance as part of your invoice finance package

·         You get access to your funds immediately, while your competition wait until their debtors pay

Contact us

If your debtors are putting pressure on your cash flow and you’d like to talk about your potential invoice finance options, call Julie Lamers on 0406 744842.

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