Getting paid on time is vital for good cashflow.
Here are 7 tips for you to consider for getting paid on time:
1) Define a clear debtors policy for your business. Be clear on your terms, when and how late invoices will be chased and escalation levels. Then stick to it.
2) Allocate specific time during the week for chasing. The team member responsible for credit control should have at least a few slots each week dedicated to calling overdue debtors.
3) Set clear expectations from the start. This might be in the initial sales conversation or right after the sale has been agreed.
4) Identify repeat offenders and have a plan of action for each one. Often payment is delayed because invoices don’t have the correct information or they may not be going to the right person.
5) Consider firing persistent repeat offenders. They are only a customer if they pay the bill. In some cases it’s better to free up your team’s time and energy to concentrate on more productive priorities.
6) Set targets. Have a debtors report produced on a weekly basis and set targets around debtors days, percentage overdue or specific customer targets.
7) Invoice as soon as possible. In some cases delays are due to internal inefficiencies. If this applies to you, addressing this could be an easy win.
Getting these basics in place and consistent, will go a long way to addressing late payment issues.
Which of the above areas could you focus on to improve your bank balance?