1st Sep 2021

Ensuring the Cash Continues to Flow

It should be simple really, shouldn’t it?  You do the work or supply the product, send an invoice and get paid.  Assuming that the work or product was satisfactory (or beyond!) then surely you have done the hard work?  Surely your role is to provide the product or service that your business is based upon – ‘exceeding customer expectations’ and ‘going that extra mile’ not credit control?

The reality is though that credit control is one of the keys to a successful and thriving business.  If the cash does not flow, then you have no business.  The pandemic has obviously taken its toll on businesses too and many face significantly more aged debt than they did previously.  Whilst businesses are ‘returning to the new normal’, that will increase pressure on cash too as the time to repay bounce back loans begins and furlough pay ends.

So, what steps can you take to get paid promptly?  Here are my 10 top tips:

  • Make invoices clear and succinct with a clear date for payment
  • Invoice on time – the longer you leave it the less likely you are to be paid
  • The sum due should not be a surprise – if it is then you should discuss it with the customer before the invoice stage (and preferably before you complete the work or finalise the product)
  • Send the invoice to the right place – sounds obvious but don’t just post it and hope it lands on the right desk
  • As soon as an invoice becomes overdue get on the phone (not email!) to the customer and find out why
  • Have a clear credit control policy for your business that is known to all staff and follow it
  • Be firm but reasonable – if this is the first time for a late payment and their reasons seem plausible, consider a longer period to pay or instalments
  • Record and follow up – if you reach an agreement with a debtor, follow it up in writing and always agree timescales
  • Consider interim invoicing – could this be a way forward for larger jobs?
  • Communication is key – a customer is less likely to default on payment if you communicate with them throughout every stage from the very outset

 

Some of the above may seem obvious, but the reality is that many in business simply dislike credit control and the conflicts that can arise.  However, if you can get the right person within your team to follow the above, you may just see an improvement in your cash flow! 

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