Understanding and managing your cashflow can make or break your business. Recent figures released by Xero reveal that New Zealand small businesses are collectively owed about $7.4 billion in overdue payments on any given day. Your portion of that will be very small but when it comes to running a successful business cash is king and managing your debtors (people who owe you money) plays a big part in that.
So, to help you stay on top of your cashflow we have put together our top tips for staying on top of your overdue customers and ensuring those positive business relationships are well looked after in the process.
If you are using MYOB or Xero, then you can automatically create reminders that are sent out a certain number of days before and/or after the due date to ensure they haven’t simply forgotten about the invoice/s. If you are unable to set automatic reminders, then putting a process in place to make contact on certain dates could be the best way to manage the initial contact.
Review the situation before making contact to show that you are in control and prepared. If you have online accounting software all of this information is available in the software.
Ensure you are speaking to the correct person, i.e. accounts payable, build a rapport with this person, which could be as simple as asking how their day is going. Advise where you are calling from and what you are calling about, trying to eliminate any questions that don’t need to be asked. Stay in control of the phone call, even if they try to escalate the conversation.
There may be unforeseen circumstances that have arisen for your customer that you need to take into account, although we can’t accept ‘excuses’ all the time, if they are a reliable ‘on time’ payer then a bit of leniency and understanding could go a long way. If it is a typical ‘late payer’ of yours then you may need to be more stern in this situation, ensuring this is managed correctly so you don’t get ‘bumped’ down the payment list out of spite. If you have regular amounts with the same customer you could suggest they set up an automatic payment.
If you say you are going to call them again by Monday, ensure that you call them again by Monday. This will ensure that they understand you have the situation under control and that you are going to stick to your word.
Every conversation, email, letter, statement, promise date, make sure you keep a note of it all. You can always use these to refer back to and it is hugely important if there were further debt collection steps to be taken i.e. Debt Collection Agency
Consistency is the key in chasing outstanding money. Human nature Is that people will try and get away with what they can so regular communication and contact lets them know that having outstanding payments due to you is not OK.
We understand it can be hard chasing people for money however it’s a job that has to be done so don’t procrastinate – if you need a hand get in touch with us by phoning 04 2329199 or complete you details below and we will be in touch.