Let’s face it; cash flow collection is not a fun or easy task. Cash flow collections can be a little tricky, with many business owners feeling anxious about it. These 4 tips have been written to make it easier for you from the outset.
ONE: Clear Expectations
During the sales process, sometimes we get so involved in ‘selling’ and making our services as attractive as possible to our clients that we are a little hazy in terms of expectations. Like any relationship, it makes perfect business sense to have a clear discussion upfront to clarify your mutual expectations. It pays (literally) to spell out the rules.
For example, if you’re offering credit to you client make sure you communicated that it’s available on the understanding that invoices are paid on time.
TWO: Make it Easy
Your invoice has a better chance of being paid if it’s easy to understand, well laid out and most importantly, accurate. From a client’s perspective, it’s incredibly irritating when invoices don’t make sense or is lacking information.
Offering a variety of payment options to make life easier for clients and invoicing quickly helps the money land in your hands faster too.
THREE: Strong Terms
The terms and conditions of payment are important. At minimum, make sure that your terms include;
- When and how payment must be made
- How your goods / services are to be supplied
- How your terms are accepted
- The consequences for failing to pay on time;
- Any disclaimers, warranties, personal guarantees or registrations of security interests.
Make sure your terms protect your business. Your terms become critical when a customer fails to make payment or is dissatisfied with the goods/services provided.
FOUR: Follow Up
Having a procedure will help your business plug any late payment leaks before your accounts dry up. As soon as an account is close to becoming overdue, be ready to go with a friendly follow-up call. The longer an overdue account is left sitting, the higher your chances of non-payment become.
A quick phone call to your customer the day after payment falls due is essential. Make sure any agreement that is made with your customer (eg an extension time to pay or a payment plan) is documented on your systems and put in writing. That way it’s clear in case you need to follow up for payment.