- Not enough Sales
- You’re not collecting the money you’re owed well enough..
The first one is something that should be pretty obvious right? So we wont go into that now, the second though is a different matter and is something that many business owners seem to struggle with. So lets look at;
10 tips to help you to collect what you’re owed.
- Ask for the money, part 1.
This is probably the most common problem of all. As crazy as this sounds, many people are reluctant to ask for money or even talk about payment. Remember the sale is not completed until you’ve been paid. There’s no point in purring over fantastic sales figures unless the money is collected.
Make sure that your order taking process includes a discussion on you’re payment terms and/or how they will pay you. (do this when they’re placing the order). Include any details of part or staged payments too if appropriate, so that everyone is clear on what’s expected.
Remember too that people expect to pay for the goods & services they buy so don’t be afraid to make it part of your sales process.
Asking for the money includes producing an invoice if you provide credit terms. Make sure this is done in a timely fashion. I.e. ASAP. (Why not deliver it with the goods?) NB. Put the Payment Due Date on your invoice so that everybody’s clear..
- Know who holds the purse strings
Establish a relationship with the person who actually handles payments. Get to know them and make sure they put you at the top of the pile.
- Understand their payment process
If your customer is a business that only pays when they receive a statement, send them a statement. Simlarly if they only process invoices that have an official order number make sure that you comply with that when taking the order. Help them to help you get paid.
- Ask for the money, part 2.
OK, so now everybody’s clear on what to expect remember to ask for the payment when it’s due. A quick call the day before the due date is perfectly fine, and will focus your customer’s mind on making the payment, plus you’ll find out if there are any reasons why they might hold back, and deal with them
- Don’t Offer Credit if you dont need to.
A landscape gardener client of mine offered 14-days for his customers to pay once all of the work was completed and agreed. The customer fully expected to pay up on completion and yet he still offered them terms! Why? Take payment up-front if you can. (NB. if you dont take credit cards etc in this day and age, in most cases you’re a dead duck!)
- Avoid Emotion
However angry or let down you feel, dont lose your temper. Be firm but fair and assertive, getting over emotional rarely helps. We may want this customer to come back for more. (We may not if they’re a bad payer, too much emotion though may just create a bad debt)
- Don’t resort to writing letters straight away
Assuming we want to retain our customers, maintaining a good relationship with them is key. So keep it personal in the early stages of a problem. A telephone conversation or a face to face meeting are far better than a faceless letter or an email. Keep it human for as long as you can. You can talk through and understand any problems and are more likely to get a swifter resolution.
- Move it on swiftly
Ok, so we want to be nice but we’re not a bank so don’t be over generous with the time allowed to pay. If its clear your not making progress escalate it to a higher level, MD to MD is always good, if still no progress then letters outlining court action may well help.
- Outsource collection
If asking for cash is not your forte, there are many firms who will take on this task for you. Consider the earlier points on maintaining relations though.
- Know your numbers.
One of the keys in getting paid on time is asking for the money when it’s due. The older the debt, the less likely you’ll collect.
An Aged Debt report should be produced and checked regularly so that you know how much you’re owed and by who, and you can take timely action.
So, a few quick ideas, helpful I hope. if you need more help ask your accountant. They can usually help and advise (if they can’t, get a new one!)
If you’d like more on this drop me a line at email@example.com or click on the right to book a free 30-minute telephone session