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Isn't it good if your customers pay on time? |
The best Christmas present for my company this season is the collection of a big amount of money from various projects which had been owed to us for quite some time. Some of these overdue have been more than 90 days. While the collection of this money has been a big cash present for us; there are still a couple of bad debts which had yet to be recovered.
As stated by the Australian credit management, there are typically 3 reasons why customers don?t pay.
? The customer can?t pay
? The debt is disputed
? The customer had no intention of paying
When you have customers like them, it will affect your cash flow and as we all know, cash flow is king. So what steps can you take to speed up the collection of your money and not to have bad paying customers?
1. First rule: Get payment first before you deliver. Get at least a portion or 50% up front before you start work.
2. Send out invoices/bills on time. The earlier you send it out, the sooner you can collect your money.
3. Monitor payments/receivables daily. Keep a close eye of this everyday; make sure you know which payments are overdue.
4. As soon as the invoices are overdue (our term is Net 7, which means it is overdue after 7 days), immediately send out reminders. The longer the invoice is not paid, the harder it is to get your money.
5. Call your customers or their accounts department to chase up the payment. The faster you get your money, the better your cash flow.
6. Extend customer payment if they can?t pay but you need them to commit to a formal payment plan.
7. As soon as you have identified a bad customer, stop sales to them and stop servicing them until they have paid or at least make a commitment to pay.
8. Get the professionals to collect your money. When it is way overdue and the customer is not paying, it is time to hire a debt collection agency.
Now I hope this will help you and myself to be better in collecting our money. Merry Christmas and Happy New Year everyone.
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