One of the significant critical functions of any business is ensuring it gets paid by customers. Companies that have a customer base that is creditworthy are golden. These industries too have their share of challenges when a customer runs into financial difficulties and then has to hold and delay your payment as that affects your business as well.
Some companies are more susceptible to receivable risk than others. If your business is $1 million and you have 1000 customers. That means no one customer can make a significant impact if they did not pay. But what if your business was the same size and only had 20 customers. That means each customer on average was $50,000. And this company may be profitable, but even one customer who runs into financial difficulty can make a significant impact on your business. Here are some tried and true tips to ensure you consistently get paid and on time.
Correct & Timely Billing Information
You want to ensure that your business has provided accurate and timely billing. Meaning, soon after the service or product has been delivered (better at the same time) you want to deliver the bill to the customer. We favor automated features that allow customer statements to go out immediately when work or the product is delivered. There are tons of accounting and finance packages that do this. It goes without saying that the bill has to be correct and detailed enough for the customer.
Stay In Touch with Customers
Ensure there are adequate touch points from sales to collections to ensure communication is maintained at all times. Have the sales department or sales process ensure customers are happy with the work and that there are no issues with the delivered product or service. Follow up is a crucial step for the accounts receivable department to ensure and remind customers to pay their bill. Consistent and timely communication can be the difference between getting paid or not.
Allow Customer Multiple Payment Options
Customers like options to pay. And some may be more expensive to maintain, however providing convenience to customers who have the flexibility to pay by different means ensures a happy customer. This leads to more consistent and timely payments. Allowing customers to pay in various ways such as a check, money order, credit card, debit card, digital check, and wire transfer will enable customers to have choices for which to pay. These methods should be spelled out from the outset and indicated on the bills and communications with the customer.
If Your Customer Misses a Payment
Your process of follow up needs to be such that when a customer misses a due date, you are already on the phone finding out if it’s a genuine cash flow issue the customer is having or something else. If it’s not a cash flow issue but the customer indicates it’s an authorization or timing issue you must stay on top of the matter by documenting what they say and ensure you/your accounts receivable department is following up weekly. That is the minimum number of call/communications you should have with
Everyone business knows that making collection calls are not fun, but necessary. Most customers are willing to pay on a timely basis but for those who are late frequently, being consistent with customer communications and assertive is very important. Leveraging more aggressive techniques like delaying or not delivering the next order for that customer are all techniques to motivate a customer to pay.
To your continued success on the next level.
The Nexlevel Business Team