Cash flow is King

One of the biggest threats facing businesses today is the delay in getting paid for work they have undertaken. 

Often this will see businesses, all of a sudden, being treated as if they were a bank!  It simply is not right. With Christmas upon us, it is even more important that you get paid before your customer uses your money for their pleasure i.e. parties, holiday's and expensive gifts!

What do you need to do to ensure those "problem" customers are dealt with effectively and efficiently?

Firstly, you need to ensure you have up to date Terms of Trade as this will set the conditions of you doing business with your customer or client, with these terms being referred to if issues arise in the future. 

Secondly, appoint someone who has the skills and knowledge in Credit Control matters.  So often we consult with businesses that are either a one or two person operation and everyone is required to be an expert in everything but is not succeeding. In medium sized business, often we find that it is the receptionist who is responsible for chasing slow payers with these people often not having the skills to do the job, the experience to know what to do, which will see them push such tasks to the bottom of the list of things they need to complete, which may see them never done at all.  If you don't have the resources to handle such duties internally then do not be afraid to outsource to a collection agency.

Thirdly, establish a robust and effective internal collection process.  This can be either paper or voice based.  Once the invoice due date has passed either, send out a reminder letter that the payment is overdue or even better get on the phone and make verbal contact with the customer.  By doing this you can effectively deal with any disputes your customer may have immediately, which will result in payment.  The longer the debt is left with no action being taken the bigger the issue may become.  It can also become a case of those clients who "scream the loudest" (continually ask for payment), gets paid the quickest.   

Fourthly, draw a line in the sand as to when you need to escalate debtor issues.  If you have tried and tried and had promise after promise but no money in the bank, then consider your next option - place it in the hands of the experts, a collection agency.  Usually there is a small charge to load the debt with an agency, however most of the cost (which can be passed on to your customer with the correct Terms of Trade in place) comes in the form of commission which is only payable once payment of the debt has been made. We would recommend that debts should be passed over at either 60 or 90 days, but one should remember the earlier the problem is escalated, the better the results of collection should be.  By taking this action you can continue with what you are good at and leave the experts to what they are good at.

If you would like a no obligation consultation on your collection issues we would be happy to talk through how improvements can be made, just give your Veda Account Manager a call to discuss.