Ten Tips To Getting Paid Promptly
Many businesses, particularly small ones, suffer from their customers paying them late. I'm not talking about 'bad debts', just slow payers. And slow payment can cripple a business's cash flow.
Here are a few ways to get your money in sooner:
- Always find out exactly what information your customer's accounts department needs on your invoice - and make sure that you comply to the letter (e.g. their order number, date of order etc).
- Find out when your customer does a check run, and by which date your bill needs to be sent in to meet that check run.
- Make sure that your invoice contains the date on which the invoice is due - not just 'payable within 30 days'.
- If you are working to a contract, ensure that payment terms are included as part of the contract that you draw up.
- Monitor your books regularly (every 2 weeks) and start to remind customers who are just a few days late.
- Chase slow payers by telephone rather than letter (at first) and note the date that they have promised payment by.
- Chase again by phone if they have not paid on time.
- When phoning, make sure that you speak to a person who can take action.
- Don't accept vague statements such as "I'll see what I can do".
- Concentrate on the biggest debts first - this will help your cash flow.
- When sending out letters (if the phone calls don't get results) don't make it obvious that the letter is part of a standard procedure (e.g. don't put "1st reminder" or words like that). People will then just wait for the "2nd reminder".
- Don't let late payers get too far behind before considering taking legal action. Before you do this, ask yourself "Do I really need this customer?". If the answer is 'no' then don't hesitate to bring your lawyer or debt collection agency in.
Kaye Vivian is a consultant with over 15 years of experience in marketing communications serving professional services firms. She also publishes The Legal/Accounting Web (http://www.cloud9.net/~kvivian/html/legal_accounting_web.html), a website with marketing and communications tips for CPAs and attorneys.
Copyright 1998 by Kaye Vivian (firstname.lastname@example.org). All rights reserved. Permission to reprint is granted provided this article is not altered and the copyright notice remains attached.