5 steps to exterminate the virus of late payment

Struggling with cash flow? Many SMEs are. Maybe cash flow is so slow that you’re not able to pay your staff or yourself a wage – 32% of business owners can’t. If you’re struggling to pay staff on time and can’t pay yourself a decent wage, that’s scary.

One of the top reasons for business failure is slow cash flow – all too often because clients haven’t paid their invoices. So, what will enable you to get paid on time? Here are a few pointers that will help…

The crucial importance of invoicing and how best to send them

The most important document in your business is your invoice. Your invoice could be the difference between survival and failure. In fact, it’s so important that you should have a cast-iron invoicing strategy, contained within your collections or credit control policy.

Here are two things you can do right now…

  1. Decide how long you’re prepared to wait to get your invoices paid.
  2. Create a simple collections policy for your business to make getting paid as important as making a sale.

It’s always best to send your invoices by email, but please make them easy for your customer to deal with.

  1. Create your invoice on the day your work is completed and email it the same day.
  2. Use the subject line wisely by using it for the invoice details.
  3. Make sure you know who needs to receive the email.

Creating invoices that are 50% more likely to be paid on time

Recent studies show that around half – 49% of invoices are issued with errors. That’s unforgivable and guess what? Invoices with errors may never be paid unless you spend lots of time and effort sorting them out…

…And if your invoices do have errors, it’s almost certain your customers won’t call to let you know!

You will find out eventually. But only when you call to chase up a late payment, which means you’ll spend even more time correcting the error. As film director Michael Cimino once said, “If you don’t get it right, what’s the point?”

‘Knock-Out’ invoices don’t have errors. ‘Knock-Out’ invoices get paid sooner.

Here are two things you can do right now…

  1. Work out and write down the 5 key things you need to change to make sure you send out only 100% correct invoices.
  2. List the 5 key benefits of a ‘Knock-Out’ invoice.

Is your customer fully aware of the invoice due date?

Believe it or not, there are still many invoices being sent out with no mention or indication of when the money is due to be paid. And even when the information is there, it’s not always easy to spot. If it’s difficult for your customer to find it, they probably won’t bother to look for it, so you can’t afford to mention it somewhere or other, you simply have to ‘smack them in the face’ with it.

You should highlight your terms of business AND your payment due date.

Here are two things you can do right now…

  1. Get a pre-invoice checklist sorted and use it – every time!
  2. Create a ‘Knock-Out’ invoice for your business and use it – every time.

Making it easy for customers to pay you – FAST

People are more inclined to react in a certain way if you make things easy for them. And paying for their goods and services is no different. Preferably, you should always ask for payment direct to your bank as this saves you time and money. Don’t forget to list all the bank information for your customer.

You should also list any other payment methods you offer, with full details. If you get this right, you’ll be covering the “We didn’t know how to pay it” excuse.

How ‘customer care’ before the due date, can save you time & money

To be good at collections, you need to stop thinking like a collector. This may seem counter-intuitive but think about it this way…

…Would you rather make a Courtesy Call or a Collections Call?

Your courtesy call is made before the payment is due and enables you to ask the important question…

“Is everything OK?”

This really is a win-win situation because if you’ve implemented a ‘Paid on Time’ strategy and you have perfect invoicing; this call will enhance your reputation as a customer service hero. But even after you’ve done everything right, there still may be an occasion where you uncover a query or an invoice needs amending. And invoices with queries don’t get paid.

By using a courtesy call as part of your strategy, you will get to know before the invoice is due for payment if there is a problem that will prevent it being ‘Paid on Time’.

Exterminate the virus of late payment

This is just a simple customer service process, that will make you or someone in your business, a champion of collections. These 5 simple steps will improve your cash flow and improve your business, so you’ll always be able to pay yourself and all your expenses. And your business will grow.

Originally posted 2020-09-17 12:39:45.

Gary Thorpe
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Gary Thorpe

Gary Thorpe has over 40 years' history and experience in business management, marketing, sales management, credit management, debt recovery and customer service, which comes from diverse sectors such as consumer finance, retail, construction, banking, events, debt recovery and manufacturing. Armed with this track record, he is able to help you manage your cash flow ensuring that you get paid on time and can better manage your credit control systems; including debt management and recovery.

5 steps to exterminate the virus of late payment

by Gary Thorpe Time to read: 3 min