Now Is The Ideal Time To Be Taking Back Control Of Your Cash
Let’s face it, no one likes to chase people for money, and no one likes to be chased but unfortunately credit control is extremely important when it comes to your business’s cash flow. As the old saying goes ‘Cash is King’, this article puts together a few tips so that you can take control of your more challenging customers, your own finances & in turn your peace of mind.
1. If you have an accountancy software package, then you should be able to run an aged receivables report. This will give you a breakdown of the money that you are owed, broken down by defined periods of time usually in 30 day or monthly tranches.
2. Once you have established which customers owe you what, make sure you note down what invoices are outstanding (and how much they are over their credit limits if you have them) before picking up the phone.
3. Get on the phone! Unfortunately, it’s all too easy to send an email but our inboxes are inundated these days so it is likely to get left unread, either because of workload, or deliberately if they are suffering their own cashflow issues. If this is the first contact you have had to make, keep it as a light touch approach, simply introduce yourself and let them know what is outstanding and ask for a payment date.
4. Be prepared to compromise! You may decide that you may not want to, and if so that is fine, but if you are dealing with another business that has cashflow issues, you may need to assess if getting a smaller amount on a regular basis (in the way of a payment plan), could be a suitable solution for you both.
5. Follow up! Make sure you send an email attaching a statement and any copy invoices they have requested. Reinforce the agreed payment date by putting this in writing at the same time.
6. Check your bank! Make sure that you check the payment has come in on the agreed date and if it hasn’t, get back on that phone!
As with a lot of things, it is about retraining common or perceived behaviours and building good habits. A lot of companies can let credit control slip due to many reasons, lack of time; lack of confidence in this area; avoidance of a “nasty job” or for prioritising perceived client goodwill over being paid on time. Schedule time in your diary regularly to keep on top of your finances and let your customers know you mean business!
A non-profit organisation WSX Enterprise runs a wide range of projects delivering business support in the UK as well as working with partners in Europe. As some examples, our projects support access to finance, digital skills, start-up guidance, and general business advice. Our team includes a wide range of business advisors from a breadth of industry experience supporting small and medium-sized businesses across our region.