Without water, a plant will wither and die. In business, poor cash flow works the same way. So how do you make sure you get paid on time? Here are our 5 Top Tips.
1. Ensure you have payment terms and include them with every quote or contract
Your payment terms should include things like:
- When you expect to be paid (e.g. 14 days, on delivery)
- How payments can be made (e.g. credit card, EFPOS, EFT, Cheque)
- What will happen if payment is not received (e.g. legal action)
2. Have a policy in place that sets out when late payments will be chased
Never be embarrassed or nervous about following up late payers. If you have done the work, you have earned your payment.
3. Send a friendly reminder
A day or so before payment is due, send slow paying customers a text or email to remind them. Often this is all that’s needed to receive faster payments.
4. Set a credit limit
While it might be a difficult conversation to have, it’s also incredibly empowering to advise a customer you cannot provide any more products or services until they pay their account. You need to protect your business by minimising your exposure to bad debt.
5. Sack delinquent payers!
If you have implemented all of these procedures and a client continues to be a bad payer, get rid of them. Too often I hear clients say “Oh but they are a good customer”. You know what? Good customers pay their accounts on time. Bad customers don’t so sack them. You and your business don’t need the hassle.
If you would like help to improve your cash flow and manage your slower paying customers, talk to the team at Numeric Eight. We provide a customised and professional debt management service. Call 02 9437 1785 or email us to learn more.