And today, we have some tips that will help you save time with credit management, make sure it actually gets done, and keep your late payments to a minimum.
Do Regular Credit Checks
First of all, make credit checks a part of your routine when bringing on a new client. Yes, they take a little bit of extra time, but that’s nothing compared to how much time you’ll spend chasing payments from a client who can’t pay. Understanding the financial situation of your clients is important, and if nothing else it will help inform your decisions about how much credit to offer them. A credit check can instantly provide a valuable insight into your client, so make it a practice to include them as a standard part of onboarding.
Tighten Your Credit Terms
Not for all of your clients – just for some. If you run a credit check and have doubts about your customers ability to pay, or if they’ve had trouble paying in the past, then it’s time to tighten up your credit terms with those clients. It’s a simple step, but it can significantly reduce cashflow issues for you in the future. And by keeping a close eye on those customers, you can decide whether they can cope with those credit terms, if they need to be tighter still, or if they have proven good payment and can be relaxed. In extreme cases, you can also refuse to work with poor payers altogether. It might seem like a drastic step but consider how much a customer is actually worth if they never pay their bills, and how much that costs you in time and resources.
Send Invoices Electronically
In this day and age there’s no excuse not to send invoices electronically. This simple step can save you a lot of time, energy and money, and it means your customers are more likely to pay on time. By avoiding the need to print, post and process hard copies, your invoices get where they need to go faster, and without any expense to you. If they are repeating invoices, you can even schedule them to be sent out automatically using your invoicing software, so you don’t need to lift a finger.
Prioritize Overdue Invoices
Statistically, the longer an invoice goes unpaid, the harder it is to collect that money. So making sure your invoices are getting paid as soon as possible is a great way to ensure you never get to that stage. Whether you need to hire someone in to chase these invoices for you or you do it yourself, prioritising chasing unpaid invoices is one great way to protect yourself from long term unpaid debts.
Diarise Courtesy Calls
This is probably one of the most overlooked credit management techniques, but it’s also one of the most effective. It’s simply blocking out some time in your diary to make courtesy calls before your invoice is due. Keeping in touch with your customers throughout the payment period significantly improves payment rates, and it gives you a chance to catch any issues before the invoice becomes overdue. It will take some time out of your day, but it will be worth it all in the long run.
Use a Debt Collection Agency
Finally, if you struggle to manage your late payments and seem to be spending more time chasing overdue invoices than keeping on top of newer ones, ask for help. Many companies use a debt collection agency for exactly this reason – to make sure they can keep up with everything. A debt collection agency can use their experience and expertise to ensure your debts are recovered, and that you don’t have to worry about managing them. It’s a small step that can make a big difference and keep your entire credit function running smoothly.
If you would like more information or have any questions, we would love to hear from you. Just get in touch with the team today to book your free consultation.