We’ve all experienced it: the untraceable client who never seems to pay his invoice on time, or at all. He’s the equivalent of that guy who pulls a ghostie when its his turn to shout beers at the pub – and when you have to deal with him in your business, he becomes more just than just a walking face palm.
You see, cash flow is key in small business. When somebody doesn’t cough up what they owe you, it can be seriously damaging to your business. If you can’t pay your vendors or upkeep your payroll, you might have to take out a loan – complete with rip-off interest rates. This can put you in a vicious cycle of borrowing and repayments that can spell doomsday for your business.
So how do you make sure your invoices are paid like clockwork? And what do you do if they’ve already reached red stamp territory? Our professional debt collectors are here to save you and your business’s finances. Like superheroes – just a little less ripped.
Help Your Payer Along
Your client or debtor may just need a bit of a nudge (or an all-out shove, but we’ll come to that later.) Setting up automated invoice reminders is the simplest fix – and can be surprisingly effective. Instead of assuming a business is purposely putting off your payment, first consider things from their point of view. We all get a bit scatty when we’re under the pump – maybe they genuinely forgot.
Most accounting software will send out automated invoice reminders, but at Fusion Group we highly recommend Xero’s reliable software for this purpose. It also helps to have a few human bookkeepers and live-action Xero-heroes on hand in case of confusion.
Another simple way to receive invoices on time? Just be decent! Send a confirmation and a friendly ‘thanks!’ after each successful payment. This will show the debtor respect, and – fingers crossed – they’ll show it to you in return.
Make It Easy
Still waiting for payment? Think about your invoicing process. Is it simple enough to allow clients to pay you quickly and efficiently? Or would they have to whip out the magnifying glass and an Oxford dictionary? If your invoices and payment requirements are simple, clients will continue to come back – and debts will be paid. If your payment processes have more steps than Jacob’s Ladder, debtors will be less likely to prioritise your business.
To be safe, make sure you have a few different payment methods to present to your client for a smooth transfer. Direct debit is pretty always a convenient payment method, working especially well for small business partnerships.
Have Your Own Back
While nudging debtors along is an upstanding thing to do, you need to look after yourself too.
First, develop comprehensive – but simple – payment terms and conditions. This single step will save you big time. If a client is balking, simply refer them to the payment terms they agreed to at the outset – and watch the money roll in.
A mistake many small business owners make is to prioritise profit over cashflow. Cashflow is as vital to a business as a blood supply is to your survival – no exaggeration! Setting yourself clear cashflow targets is an awesome way to check up on your cash status.
A good way to get steady cashflow trickling in? Consider payment plans. Your client will love the convenience and savings – and you’ll reap all the benefits of regular, predictable cash flow.
Finally, your bank can be your best friend in a period of financial strife. Keep them updated on payment statuses. They have the authority and ability to pursue overdue invoices that would normally be out of your control.
If All Else Fails…
Hire a professional debt collector. We’re not just spruiking ourselves – when your business’s survival is at question, it’s crunch time.
At Fusion, our professional debt collectors will be across all your accounts, constantly checking in to make sure none are overlooked. When invoices are late, we create personalized options that recoup the funds in the most affordable and effective manner for you – starting with a reminder email and building up to the big guns. Even better? We don’t take a cent if we can’t get your money back for you.
After a professional debt collector to get you back the money you’re owed? Our Perth bookkeepers have both one-off and add-on debt collection services that will see your business soaring to infinity and beyond. BYO cape!