Reduce payment terms

Far too many businesses simply offer 30 days as some sort of default. Offering 30 days credit means that, on average, you will be paid on day 44. Offering 7-day terms means that you'll be paid as early as day 21.

Also, if you ask for x% in advance of starting work, the chances of some of your customers agreeing to pay early are significantly greater than if you don’t ask!

Chase before the due date

Switch your credit control to being proactive rather than reactive. Statements and reminders should be sent out ahead of the due date, not after. Naturally, the wording needs to be changed slightly but checking that the payment will be received on the due date, rather than asking why it wasn’t, is a far better approach.

Invoice daily

Regardless of your payment terms, if you only invoice at the end of the month and did the job two weeks ago, you have instantly gifted your customer 14 days credit, regardless of your terms. Remember that cloud accounting makes daily invoicing a simple, straightforward activity.

Make getting paid easy

Bank transfers, cash and cheque are fine, but there are countless low-cost ways to accept payment.  Debit cards, credit cards, direct debits and standing orders make it easy for your customers to part with their cash. As an aside, we recommend businesses no longer accept cheques. 

Stick to your terms

Essentially, stop apologising for asking your customers to pay you what they agreed when they agreed.  Instead, become ‘that’ supplier that they look at and say “Yeah - you better pay them”. And go legal early; start the Pre-Action Protocol as a negotiation tool (but also to ensure you are on the front foot if a formal claim becomes necessary).  

Use software

Cloud accounting software can now automate, simplify and manage your credit control function for little or no cost. Build an online credit control team by fully understanding and using the features and functions of your cloud accounting software. 

Speak to the user

When chasing money, speak to the user of your services or product, not the ‘person from accounts’. The ‘user’ will understand the pain of their account being put on hold and will undoubtedly have a much better relationship with you as a supplier. Have the user put pressure on their accounts team, rather than you.

Charge interest on all overdue amounts

You can charge 8% above the Bank of England base rate - so 12.5% per year (currently). The key is that this is not about making money, it is about getting paid.  So be quick to point out that your customer could probably borrow from their bank cheaper than from you and be prepared to give them a ‘win’ by waiving the interest charge in return for immediate payment.

Don’t offer any cover

Provide a copy invoice at every step of the way (software can help) and don’t allow ‘I’m sorry I can’t seem to find your invoice in our system’ to be an excuse. Again, fully using your cloud accounting software can ensure that problem customers have nowhere to hide.

Have a naughty step

Make sure you know who the problem payers are and prioritise them when starting (in advance of the payment due date!) your credit control process. Also, create a plan to either disengage from that customer or to ensure that they do not also benefit from discounts, special offers, etc.

A great negotiation technique is ‘I could offer you that price if your payment history was within the correct criteria’.

And remember - ATN Partnership can help with all of the above, including ensuring your cloud accounting software is doing the heavy lifting.