We spoke with Bernadine Geary, Director, Cashflow Finance at Fundamental Business Finance, who provided some insights to the...
Slow Paying Debtors? Here’s 7 tips to help.
Tips and tricks to getting paid on time.Jorja Creighton
Slow paying debtors, the misery of every business owner at some point. Payment terms are not being met, receivables blow out and the money that could so usefully be put back in the business is just sitting tickling their fancy. Torture.
There are so many reasons for a client to put off paying a due invoice – but often the reason behind letting the invoice age in the first place is because the supplier doesn’t want to damage the client relationship.
Businesses big and small are attempting to reclaim that one-on-one customer relationship of bygone days.
Suppliers are putting so much effort into avoiding giving their customers any excuse to leave. With so much competition around these suppliers will pretty much go to any length short of bumping uglies to keep the customer feeling good and loving life so as to win repeat business. This means the already entitled customer can get away with murder if the right procedures aren’t set up.
To avoid crushing the business relationship it is important to establish (quick smart) the rules and regulations you are going to operate under.
- Start the relationship with a clear procedure that isn’t too strict but has enough structure that gives the customer a clear understanding of what you expect – this might include some manufactured leeway. Making them think you are stretching it for them if they really need a little bit more time. Sneaky.
- Adopt a friendly no-nonsense approach to every customer. Build the relationship around the authority from the beginning. People respond to leadership and expertise – they are also creatures of habit so once you establish the system your relationship can grow around it.
- Discuss the payment terms upfront, when you expect to be paid and issue the invoice quickly.
- Get to know the people in charge of paying the bills and don’t forget these people during the holiday season when you are sending heartfelt thank-you cards. People who know you as a person will do their best to make sure you are paid. Especially if they know you as a nice person.
- Practice your persuasive tactics, turn into your inner salesman and get yourself on top of the list of people they need to pay.
- Keep the conversation rolling, when the invoice due date is approaching – let them know you are serious about being paid. Whether you use software that sends reminders or use your own time to call.
- My personal experience – I collected debt as a short term job, I had no particular skill, I simply called them, was polite but kept it short and called again two days later. My reputation as a good money collector continues to this day and all I did was make a couple of calls. Don’t be afraid to call them and talk money – ask when they expect to pay?
For some really sound advice on this topic here is a related article from Xero – https://www.xero.com/ie/resources/small-business-guides/invoicing/invoice-payment-terms/
If you want to automate the process there are plenty of options for you – find some clever software in this previous blog post – //blog.waddle.com.au/how-will-you-handle-late-invoice-payments-this-year/
Of course Waddle is in the business of helping reduce the stresses of poor cash flow, if you have your cash tied up in late paying debtors and need it now we are able to give you fast and confidential access to it.
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