Cash Flow Is King – 4 Simple Credit Control Tips

Every business wants to earn money and make a profit. It’s the point of being in business. And to achieve that goal, it’s important to offer quality goods and services to their clients and standing out from their competitors. If a business is profitable, it makes good business sense to reinvest that profit back into the business, giving you room to grow, improve your services, add new ones and reward the people who made the business possible. All of those steps should be in any good business plan, and in an ideal world it would all happen. But in reality, businesses struggle to reinvest in the way they should. And while there are a lot of reasons for this, there is one that stands out above all – and that’s the late payments of their customers. So how can growing businesses get a handle on their credit control and free up some money to actually grow their business?

Clearly State Your Payment Terms And Conditions

This is something we talk about a lot. But it’s incredibly important, so we’re going to talk about it again. Setting out your payment terms and conditions, in writing, before a sale is agreed, is essential for encouraging prompt payments, and for evidence if a payment is disputed in the future. These should be on your website, your invoices, your contracts, even your email signature. Most debtors are very conscious of what they have to pay, but if it isn’t set out in black and while then your business has nothing to fall back on if the debtor starts to query them. Setting out your Terms & Conditions in writing highlights them to your clients and creates a clear and consistent approach.

Reward Clients Who Pay On Time (Or Early)

A good customer is a paying customer. But research has proven that rewarding negative behaviour has little impact, so you need to focus on rewarding the behaviours you want to see more of. Rewarding your clients who pay early or on time is a great way to do this. There are a couple of options here as well. You can offer them a discount off their invoice for paying early or on time, or a discount on their next order. You could include a free gift with their next purchase, or something similar. This will make your clients feel special and valued by the business, which in turn increases your sales and turnover, and encourages prompt payment.

Don’t Be Afraid To Talk To Your Clients About Payments

Don’t just sit and twiddle your thumbs, hoping that your clients will pay their overdue invoices by themselves. Calling and emailing about the overdue payment and asking when you can expect payment is perfectly within your rights, and often will give you better results than if you just say nothing. But a surprising amount of people skip this step wherever possible. No one likes pressing their clients for payment, but failing to do so sets a precedent with your clients that they can delay payments. Whereas if you are in contact with them about the payment at the invoice issuing, 15 day and 30 day marks, the client will get the impression that your business is on the ball with credit control, and is more likely to pay in a timely, manner.

Make Sure You Have The Right IT Systems

This one might seem a bit left field, but bear with us here. There are a LOT of CRM systems out there that can help you with your cash flow and credit management – but you need to make sure you’re investing in the right ones. Good credit management is all about having a clear overview and good processes in place to deal with your credit control, which the right software can help you with. Specialised software is much more advanced than an excel spreadsheet, and can do a lot of the hard work for you. In some cases, they can even create and send invoices for you, as well as tracking payments in and sending payment reminders to customers whose accounts show as overdue. This means you can reduce the number of late payments and improve your cash flow.

At Debtcol, we work with businesses who are struggling with their cash flow, particularly around late payments. Along with tips and advice, we provide a full suite of outsourced credit control and debt recovery services, from financial investigation to debt recovery and legal support. To find out more, please just get in touch with us today to book your free consultation.