So you have completed the job. After many changes and communication breakdowns, you delivered on time and exactly to specification. Now you sit and wait to be paid. Thirty days later, you?re still waiting. Sixty days later, you?re almost begging. Ninety days later, you are biting off your fingernails and tearing your hair out. This has happened to every small business that offers credit to their clients. How can you get paid on time and maybe even early? Here are my top seven tips for getting paid on time:
1. Do thorough credit checks before offering credit. Ok, I know that many clients will assume that you should automatically give them 30 days credit, no questions asked. That might work great for their cashflow but not for yours. Have every client complete a credit application, perform the checks and get at least two trade references. Credit is a privilege, not an automatic right.
2. Settle any disputes as quickly as possible. If there are any problems, don?t bury your head in the sand or procrastinate. Deal with them as soon as you can. Show your client that you are as committed to solving the problem as you were to making the original sale. Not only will this help you get paid on time but it will also strengthen your relationship with your client.
3. Send out invoices promptly. By this I mean, on the day of despatch of the goods or completion date of the service. If you can include the invoice with the goods do that but also send a copy to accounts. Sometimes if you send an invoice late, the accounts department will only pay 30 days from receipt instead of 30 days from the invoice date. Don?t allow this to happen.
4. Call to make sure that the invoice was received. Make a gentle call ensuring that the invoice has been seen and did not get ?lost in the post?. This technique is usually recommended for first time clients. Your regular clients might get a little peeved if you do this every single time.
5. Get the name of the person in the accounts payable. You should capture this information on your credit application form. Often, when you call to chase payment, you might speak to more than one person and get different responses. If you deal with the same person every time, they are accountable if the payment does not arrive when promised. If they tell you that the financial director has to approve the payment, get her name too.
6. Call on the day when the payment is due and find when it will be made. Don?t be aggressive or demanding this early in the collections process. Calling early can encourage a slow payer to deal with your invoice promptly.
7. Offer a discount for settling the bill early. A small discount such as 5% if settled within 30 days or 10% if settled within 7 days can be very appealing for clients who want to make additional savings on the transaction. Of course, only offer this if your profit margin can take the hit.
My last bit of advice: don?t be afraid to pick up the phone and talk to your clients about payment. Often, we might be timid about asking for payment because we don?t want to upset our clients. But remember, a client who doesn?t pay, no matter how great a company they may seem, is useless to your business.
Tara Roitman is the marketing manager for Media Heaven Ltd - full service experts in CD duplication, DVD duplication, CD Packaging , and USB memory duplication
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