10 tips to help you chase debts
17th June 2014
As a small business, cashflow is one of the most important things to monitor and keep under control. Most of our clients report that they have quite a lot of customers that take over 60 days to pay.
The trouble is that most of us worry about upsetting our customers and that ultimately if hassled they may go elsewhere. However, it is important to look at how much time you are spending chasing particular customers as you this is valuable time that could be spent elsewhere.
So what can you do:
Raise the invoice – Always issue your invoices as soon as possible, if you haven’t issued them you won’t get paid.
Credit terms – Make sure that your credit terms are properly communicated to all of your customers.
Systemise – Set up a system so that reminders are sent as soon as invoices become overdue. In our experience a polite reminder at this point is useful as often the customer has misplaced the original invoice.
Automate – Consider using a debtor chasing app to automate your reminders, you may have to step in at some point but it will definitely save you some time.
Avoid risk – If your invoices are for larger amounts consider running a credit check on any new customers before undertaking any work.
Keep a record – Keep a record of your communications with customers as you may need evidence if you end up needing to take legal action.
Review – Review your outstanding invoices on a regular basis.
Make payment easy – Always display your bank details on your invoices. Can you accept card payments or even consider if using a direct debit system would be useful for your business?
Assess – See if you have customers that are always late paying, are they your valued customers or would you be better off without them? Debtograph gives a graphical representation by linking to your Xero account and it’s free.
Outsource – Consider using a bookkeeper or external resource to chase your debts, especially if your business relies heavily on your relationship with the client.
The main thing is to have a plan of how to keep on top of it all and keep the cash coming in.
If you need assistance with your business finances, give us a call, buy us a coffee and we can have a chat about how we can help.