Staying on top of credit control is key to help manage your business’s cashflow. It also gives you peace of mind. However, it can be incredibly time consuming. In this article I take a look at 6 ways to improve your processes and help you stay on top of outstanding client debts.
1. Change your payment terms
Don’t automatically give every customer 30 days to pay just because that is the norm. Consider agreeing with your clients that payment is due on completion, or within 7 days of completion. Larger companies may be reluctant to agree but it is always worth asking!
2. Ask for payment upfront
For new clients, why not get a partial upfront payment before work commences? It helps if you can justify why you need this, eg to pay for materials or to book extra staff to carry out the work.
3. Offer prompt payment discounts
If you offer a prompt payment discount such as reducing the bill by 2% for clients that pay within 7 days, this can drastically improve cashflow. If your business currently relies on expensive credit (eg an overdraft) the discounts given can potentially save money when compared to overdraft fees and interest.
4. Set up direct debits
For businesses that send out regular invoices to the same clients it is worth considering setting up a direct debit system to collect payments. Go Cardless offer a great low-cost online service which is simple to set up and operate. This can be linked to your Xero account too.
5. Monitor payments with an online accounting system
Using an online accounting system, such as Xero can give you a real-time view on outstanding invoices. Clients can then be chased directly from within the system and invoice reminders can be sent automatically.
6. Online credit control systems
Satago integrates with your online accounting system and automates requests for overdue debts. It also offers credit checks and invoice financing.
If your business could benefit from improving its systems, please get in touch.