Late payments can be quite tedious and time-consuming to recover. Here are some tips to prevent future late payments once and for all.
The secret of timely collections lays in the systematic and consistent credit management practices that should underpin your relationship with every customer. Dealing with late payments can be a tedious task, however it does not have to be. Protect your company’s cash flow and prevent late payment by following a few simple steps.
1. Business contract
Clearly state your terms and conditions of trade and ideally get the purchaser to sign them with their order.
2. Constant watch-out
Run a credit check of prospective customers. However, these may not help when you run into trouble with past buyers. So keep constant watch for warning signs like slipping payments, round-number or unsigned cheques.
3. Bill promptly
Invoice correctly and as soon as possible. Ensure the pay-by date is clear.
Depending on the amount in question, follow up three days after posting your invoice and confirm whether they have received it and passed it for payment.
5. Overdue invoice:
On the overdue date, call and politely ask if there is a problem because payment is late and point out that interest is now accruing if necessary.
6. Documentation of calls
Keep notes of every conversation you have from now on and immediately fax the customer a summary after each call.
7. The cheque is in the post...
If they say they will put a cheque in the post, ask them to post it first class and allow three days before calling again.
8. The cheque is in the post...Again…
Ask them to fax a copy of the signed cheque to you as proof that they have written it and intend to pay. Alternatively ask them for the cheque number.
9. Pay a visit
If the company is local, call and request a meeting to discuss or possibly finalize payment.
10. Write a letter
Send the customer a letter drawing attention to your terms and conditions of trade and enclose proof of chasing payment.
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