Many businesses struggle with late payment and with the problem getting increasingly worse in the UK, what can you do to help minimise the effects?
1) Make your payment terms very clear
When taking on new customers make it clear and transparent when you expect payment to be made. Include it as part of your process so your customer is fully aware of the timescales.
Ensure you add this to your agreements with customers and your terms are shown clearly on your invoices.
2) Include ways to pay
With online banking now simple and easy to use, there is no excuse for your customers not paying direct into your bank account. This avoids payments by cheque which can easily go astray or bounce! If you add your bank details to all your invoices this will avoid the common excuse that customers don’t know where to send payment.
3) Due diligence
Winning new business and bringing new customers on board is great, but remember to perform credit checks. This will give you an insight into their risk and help you to make a decision on how to proceed.
If you have an invoice finance facility in place, these credit checking services are often carried out by the invoice finance company for you.
4) Credit control
We are always talking about the importance of credit control (see our other blog here), so it will come as no surprise that we advocate outsourcing your credit control to an expert or employing a good credit controller. If you take credit control seriously this will be the main process that will help to ease late payment or eliminate it altogether.
5) Be prepared to be firm
If you have customers who consistently pay late you need to be firm. You are not obliged to extend credit to anyone and remember it is your money they are holding on to. If problems persist, you may need to consider whether you are willing to deal with them at all.
6) Understand, talk and build relationships
It is not all doom and gloom as you may be able to reduce late payments by building better relationships with your customers. If you have a large customer, get to know the person in their accounts department. If they can put a friendly voice to a payment, they are more likely to pay your invoice more quickly.
If you follow the above tips you will help to reduce late payment and increase your cash flow. If you would like help with chasing payments or increasing your cash flow even further we have lots of options for you to choose and select the right one for you.
Our invoice finance solutions enable you to release cash tied up in your unpaid invoices, meaning you can access cash as soon as you raise the invoice. Our expert credit controllers work for you and become part of your team to professionally collect payments in from your customers.
For more information about invoice finance contact our friendly team here and we can answer any questions you may have.