How to be the first in line for payment | 7 top tips
With the end of many Government support schemes on the horizon, we will likely see more businesses facing financial distress and a rise in late payment as the year progresses.
Fortunately, there are some things you can do to improve your chances of getting paid on time by your customers.
So, here are seven top tips to help you get to the front of the queue when it comes to payments.
Preparation is key in all aspects of business, but it’s particularly important when it comes to credit control. A well thought out and efficient credit management strategy should be at the heart of everything you do, providing continuity and best practice throughout all financial business aspects. By clearly setting out a day-by-day strategy from before an order is placed until the invoice is paid, your team can adopt a co-ordinated and professional credit control procedure.
Encourage early payment
One of the easiest ways to get your invoices to the front of the queue is to incentivise early payment. Early settlement discounts can provide an incentive for customers to pay promptly, ensuring you get paid within terms and reducing the cash flow gap between paying suppliers and receiving payment.
Focus on getting paid
No matter what stage of your customer relationships, your focus should always be on getting paid. Before any order is placed you need to focus on gathering as much information as possible about the customer and their ability to pay. You can achieve this by using account opening forms and credit checks. This should be done for both new and existing customers routinely.
Then, once the order has been placed you need to make sure that you stick to your credit control strategy.
It can also be beneficial to only incentivise sales teams once payment has been received. This ensures that they only focus on the customers who are likely to pay.
Invoice on time
Sending invoices quickly and accurately as soon as an order is fulfilled can speed up the payment process significantly. For example, if there are any disputes, you’ll have more time to settle them with the customer. You can also make the process even faster and more efficient by emailing the invoice rather than posting it.
Review your ledger regularly
It’s vital to regularly review your sales ledger as part of the credit control process to ensure that your customers’ payment activity is always monitored and that you know precisely when an invoice will exceed its credit terms. Without this knowledge, your credit control process will lose its efficiency, punctuality and performance.
Stay in touch
Building a strong relationship with your customers won’t just improve your chances of getting paid on time, it could also encourage them to purchase more goods and services from your business in the future.
Make regular courtesy calls to your customer throughout the credit period to continue building that relationship and ensure that your invoice stays front of mind.
As soon as an invoice goes overdue it threatens your cash flow, so it’s vital to take action quickly.
If your internal efforts aren’t having the desired effect or are consuming too much time, use a debt collection agency to recover your outstanding debts. Often, simply introducing a third party will encourage the customer to pay, and a debt collection agency will use all its expertise to recovery payment quickly.
Once your customers know that you take any late payment seriously they will be less likely to try delaying payment again.
At Hilton-Baird, we not only understand how difficult it can be to get paid on time, but also how burdensome credit control can be for businesses of all sizes.
That’s why our outsourced credit control service dedicates time, attention and expertise to improve results and give you the time and resource to focus on core business issues.
Benefits of outsourcing your credit control include:
- Access collections expertise that will rival and eclipse in-house resources to bring results
- Regain time and resource to focus on newer invoices
- Peace of mind that your invoices are in safe hands
- Improved cash flow
To find out more about our outsourced credit control service, please call 0800 9774848 or request a call back.