If you want to protect your business from late or non-payment of invoices, we’ve got some tips for you. Good invoice management is all about being proactive and managing open lines of communication. If you want to ensure you get paid on time, you could start by keeping a close eye on your customers. Protect yourself from late or non-payment with clear payment terms and good communication. Read on for part four of our five part series on cash flow management.
Know your customers.
Most of us would be cautious lending money to a friend, and yet we might sell product to new customers without definite knowledge of whether they will be able to complete the payment that they have promised. Unfortunately it’s not always possible to identify a customer who will fail to pay you from the way they present themselves or their business.
If you want to protect yourself from customers who don’t pay, make it part of the way that you do business to credit-check new customers. This includes updating your credit check information for existing customers on a regular business. Unfortunately customers won’t necessarily share with you if their business is looking shaky and they may not be able to pay the next bill.
The onus is on you to proactively manage the information at hand and keep an eye on your customers to ensure an unpaid invoice doesn’t jeopardise your business. Credit checking is smart business sense and will help you to avoid getting into a business relationship with a company who are unlikely to pay their bills.
Create a level playing field.
Nothing ensures that everyone is on the same page like some clear terms and conditions of purchase and a written copy of the payment terms. This doesn’t need to cost you the earth in legal fees – it should be possible to create a standard agreement that you can manage with all your customers. What it does mean is that the details of your payment terms are set out in black and white, and without cause for misinterpretation. It’s worth repeating them on your invoice as well so that you remind your customers of the terms they have committed to when you request payment for goods or services provided. Make sure you’re practising smart business sense with some good legal advice to protect your company from future risk.
Have a clear plan in place.
As with everything in life, when it comes to non-paying customers it’s best to hope for the best but prepare for the worst. We hope you won’t have to use it, but it’s definitely worth preparing a plan so that if you do encounter a customer who doesn’t pay, you know exactly what steps to take. Make sure good communication is central to any strategy you take. Practice good invoice management in terms of timely issuing and tracking of invoices, and having a good understanding of when an invoice becomes overdue so you can follow up with your customer and identify what the cause of the late payment is. You may want to explore some back up plans in case your customer is unable to pay – such as payment plans. If you need to call in the professionals it’s good to have a preferred debt collection agency lined up.
Introducing Fifo Capital
Fifo Capital specialise in providing alternative finance solutions to small and medium sized businesses. If you’re looking for great customer service combined with a smart product that will boost your cash flow – contact us here today.