Time and time again we speak with clients that are struggling with their cash flow because of late payments and evasive customers. Using a third party, like Commercial Domestic Investigations can help to improve your cash flow. However, there are some ways that you can take care of these problems before having to call in reinforcements.
The first major consideration you should make is about your payment terms. Define these from the outset with your clients; they should be clearly outlined in your customer agreements and verbally communicated between you both. Make sure that the client is aware of your terms and ask them to sign the agreement to show that they have understood. Typically, companies trade on 30-day terms, but there is no legal obligation to do so, choose payment terms that work best for your business, 7 days would be the ideal. Make your payment terms available on every invoice that you send out so that there can be no confusion about where your clients stand.
While it can be tempting to take a firm stance with customers, it is beneficial to be a little bit flexible. Offer several methods of payment so that the client has options, you can increase your chances of on-time payment if you offer more than just a cheque as a form of payment. If a client pays the same amount regularly, then consider offering a small discount if they arrange a standing order. This is a great way to encourage payment on-time.
We cannot stress enough; a credit report can help you determine if you should enter into business with a client. If you are a larger business with hundreds, even thousands, of clients, credit checking every single one may become expensive. To keep costs down, you may opt to credit check only the clients that are spending over a certain amount. If a client has a poor credit score, then it would be wise to ask for a deposit or payment upfront to avoid problems down the line. If they are serious about doing business with you, then they will understand.
Encouraging a customer to pay on-time can become overwhelming, it may feel like you’re trying to climb an impossible mountain every month. Try offering a client an early settlement figure on overdue payments, or even a discount off their next order if they make a payment in full. This can be more effective than enforcing interest or late payment charges.
Debt recovery and credit management protocols are regularly being updated; a third-party agency will stay up-to-date with these policies and so you can benefit from outsourcing your credit control to an expert team. Customer care is important to a business and for the most part, you can resolve late payments by speaking with your customer. In some cases, the issue cannot be resolved, and in spite of all of your efforts, an agreement cannot be reached. A company like Commercial Domestic Investigations can take care of your overdue accounts efficiently and professionally. If you want to speak to our team about your needs, contact us on 08444 159 200, use our contact form or email firstname.lastname@example.org.