03.07.2020

Cash is always King, especially now!

 Show Interest

Cash is always King, especially now!

 Show Interest
Cash is always King, especially now!

As book-keepers we never cease to be amazed at how lax businesses can be in collecting what's due to them. In our widespread experience this is very common, if not normal. As we emerge from lockdown there has never been a more important time to be right on top of sales receipts.

If your customers are slow at paying or defaulting then follow these 8 simple steps.


1. Clear procedures

Ensure you have clear written procedures in your credit management system that your staff can follow. Starting from the moment a customer places an order through to the payment of the invoice. This will improve efficiency and allow your accounts team to be accurate, professional and prompt. Check that your terms and conditions are clearly shown to the customer. Review your Aged Debtor list at least weekly - ensure it is up to date and accurate.

2. Know your Customers

Before engaging with new customers perform credit checks (buy into a service). This will suggest a credit limit so use it. If you want to trade beyond that ask for a payment upfront for the excess. Follow this also for existing customers.

Because of Covid-19 and as often happens anyway some businesses are very stretched so it’s important to monitor for any adverse changes. If a customer becomes a late payer, be prepared to take a firm stance and put them on a 'stop list'. Keep in contact with customers to become aware of any potential problems. Profile your customers to distinguish the ones to watch carefully.

3 Know what is Owed to you

Check that your debtor information is really accurate and prompt. This will include a bank reconciliation, accurate allocations of receipts to invoices and complete posting of all sales invoices.

4 Accuracy and Speed of Invoicing

The sooner your invoice is on the customer’s system the sooner it is likely to be paid. Ensuring all information is accurate will prevent delays and excuses.

5 Make payment easy

Offer your customers prompt and easy payment methods such as BACS or credit card. Direct Debit is brilliant, now easily available linked to Xero - this is a major breakthrough and means you collect the funds on time, under your control. Ensure the accepted payment methods and your bank details are clearly displayed on your invoice.

6 Chase promptly

At least weekly reviews will enable you to identify promptly when credit terms have been exceeded. Acting quickly will improve the chances of payment in full. A polite and professional approach, whilst remaining firm, will demonstrate that you are in control. Send statements where required as some customers won't pay otherwise. Then follow the steps of your credit control procedure. Follow up on tell tale signs if customers dispute your statements – maybe such are wrong which really upsets prompt payment.

Maintaining the relationship with your customer whilst trying to get your money in may be tricky. Tapping into the resources of an outsourced debt collection agency enables you to distance yourself from the process. Credit control should be an everyday business task, however, with so many demands on time, collecting money can be a drain on internal resource. Outsourcing your credit management can free up this time, allowing it to be better used elsewhere.

Recognise that you will be in competition with other suppliers also chasing for their payment – it’s usually the most persistent ones that are paid first.

7 Use Software

Xero links to a number of add-ons which automate the debt chasing process, saving a lot of time or more likely doing the job you’re not currently doing very well.

8 Say thank you

Customers that pay on time are worth their weight in gold. Thank those that do as this will help to build relationships and sales.
  • Bookkeeping
  • Debt Recovery
  • Account Management

We're exclusively focussed on these two services:

A)

Business Management

What are net promoter scores and are customer surveys...

We’ve just run a Customer Survey and the scores on the doors were +83. But what does that actually mean and are the…
Accountancy

How to minimise the risk of slow or non payment

You really need to check the credit risk. For companies you can do just a little bit of homework on the Companies House…
Business Management

Online working or Onsite?

Our work of book-keeping with management accounts plus a payroll bureau was about 85% online before Covid-19, now of…

More Articles

Business Management

Management Accounts – Part three in a series of three blogs.

In this the final of a three part blog we look at Marketing for Profit using Management Accounts, how Management…
Business Management

Management Accounts – Part two in a series of three blogs.

Management Accounts – Part two in a series of three blogs. In this the second of three blogs we look at who uses…
Business Management

Management Accounts – Part one in a series of three blogs

What are they, why do so few businesses have any and what most businesses do What are management accounts?Everybody has…

Would you like to promote an article ?

Post articles and opinions on London Professionals to attract new clients and referrals. Feature in newsletters.
Join for free today and upload your articles for new contacts to read and enquire further.

Find the right professionals in London

View The Full Index

Search By:

Submit your Enquiry here

Enquiry Details

Contact Details