With £5.8bn written off by British SME’s in the last financial year, it has never been more important for companies to get paid. The average UK business spends over 130 hours a year chasing invoices. As your business expands the more clients you have; which is great however the more payments you have to keep track of. There are numerous different ways that you can negotiate your cash flow, anything that gives you a little leverage over the debtors will give you an advantage when chasing an invoice.
Keep track of your invoices
When you send out an invoice for the product or service that you have provided, set a reminder for when the payment is due so that you can start chasing the payment as soon as it is overdue. The earlier you chase down your clients, the sooner you will get paid. Not sure how to chase a payment without scaring off your clients? Read our “How To” blog here.
Build a relationship
A common complaint from companies who deal with suppliers, is that they only hear from them when they want payment. Spend time cultivating a solid relationship, email or call the client once the product/service has been received to make sure that the customer is happy. That way the client has had some communication before a payment request comes through. If the customer is happy and has a genuine relationship with you and your company, then they are more likely to pay on time.
Offer an incentive
Deals and discounts have been around for years but have you ever thought about using them with your customers’ payment terms. By offering a discount on the total due may encourage your debtors to pay – be sure to set a limit though, for example offer a 10% discount if they pay upfront or a 5% discount if they pay within 7 days. If you can’t afford to lose money on this invoice, offer a discount on their next order. This will also help when forecasting your cashflow.
Don’t rush to extend payment terms
Shorter payment terms mean quicker payment, great for your cashflow! Extending payment terms for your valued and perhaps your higher spending clients may be a good idea. It can help with building a trusting relationship and make the client feel a little more respected. Be wary of doing this, the longer the term the longer you will have to subsidise the balance in your cashflow. There is always the option to request that your higher risk clients pay on receipt of invoice or even up front.
Finally, don’t be afraid to get tough. If a client is refusing to pay after their term has ended, it may be time to call the experts. Commercial Domestic Investigations have over 30 years of experience in this industry and our highly trained staff are knowledgeable on all aspects of your debt recovery needs. Call us on 08444 159200 or email firstname.lastname@example.org to find out how we can help you.