Boost Your Cash Flow by Collecting Debts Sooner: 5 Tips for Better Cash Flow
Hi, my name is Adam Stewart, Debt Collection Professional and owner of Debt Recoveries Australia. One of the toughest things in any large or small business is getting good cash flow happening. Credit Managers will be under the pump to show results in order to improve the all-important bottom line.
Actively managing your accounts receivables and your debtors is not something everyone likes to do. I hope that you have a good credit manager in place.
Don’t have a credit manager? Here are some tips that may help you.
Boost Your Cash Flow Tip No 1: Prevention
When I am providing a free credit control appraisal for my clients, the first thing I look at are the systems that are in place and the customer service, if any, that is available to the customers. Have you delivered on time? Did the product/service live up to the standard expected? Was there good customer service follow-up? I encourage my clients to have these systems and processes in place first, in order to prevent bad debts happening.
People pay the people they like first – not the fairest side of human nature, but a true one, and one that you can easily work with to your advantage simply by having good customer service in place in the first instance.
Have a thing about including in your terms and conditions a discount for early payments rather than a fine for late payment – then publicise it on your invoice. Do not be afraid to clearly state your terms to every customer you issue invoices to. Even print a copy of your terms on the back of every Invoice. Make sure in the beginning of the sale you include a talk about outlining your expectations about on-time payment.
Boost Your Cash Flow Tip No 2: Establish Ground Rules
Set the rules of the game and then insist everyone follows them. This leads to improved control over your invoicing leads to healthier cash flow, not to mention more time to concentrate on new customers and maintaining existing customers.
I suggest having very clear terms and conditions. Regularly remind your customers of what you are expecting. Hand your terms and conditions to customers when you do the quote by including it the back of your invoice and by re-sending terms with your invoice reminders. Establish a clear policy and communicate that you expect everyone to stick to the policy.
Boost Your Cash Flow Tip No. 3: Establish a System
I love systems and processes. They sure make my company run a lot easier. So make sure you have a follow up system, with alerts on overdue payments. This can offer a tremendous advantage to the business’s cash flow.
Make sure you are sending your invoices by both snail mail and email. Send your invoice to the manager of the department you are dealing with, as well as their accounts payable person.
Boost Your Cash Flow Tip No. 4: Do Not Forget to Follow-Up
It may sound obvious but following up on your invoices needs to be done. Now that you have the system in place, take the action and make sure everyone in your company knows what this system is.
Show your customers that you are serious about your business by making sure you are punctual about reminders. Use phone calls instead of emails as this will demonstrate to your customer that you are serious about payment.
Another easier way is to keep good file notes about the debtor’s calls. Include at a minimum for every call the following: date, time, name and title of the person spoken to and the exact details of every conversation. This prevents any misunderstandings and minimises pushback and the run-around – especially when collecting debts from larger organisations.
Boost Your Cash Flow Tip No. 5: Know When to Give Up
Please do not get emotional about a debt and do not make it personal. Trust me; it is not worth the stress. Sometimes, you are just never going to get your money, so you need to learn when to let go and simply walk away. Then you can concentrate on servicing those customers that are paying on time.
Please contact me if you would like a free credit control appraisal. Email me at firstname.lastname@example.org or call 1300 799 511. You may also Skype me at debtrecoveries.