Local Life – June 2014 – How to Collect More Money
CMA Accountancy – How to Collect More Money
CMA is a firm of Accountants based in Wigan. We provide the usual services such as annual accounts and tax returns etc but we also work proactively with our clients to ensure they have a great business.
We do this by providing them with the tools to manage their business. This could be by helping them implement cloud based accounting software such as Xero, proving them with regular management accounts or generally just being available for business owners to bounce ideas off.
This month we are looking at ways for companies to manage their customers so that they get paid on time.
Cashflow is the lifeblood of any business. All businesses will struggle without positive cashflow. Where margins are tight it is vital that you collect your payments when they are due. Many businesses go bust every year simply because they are owed money. Systematic, well planned credit control practices must be put in place before your start giving credit terms to customers.
The following tips can help your stay in the black:
Set out your terms and conditions
This is your opportunity to clearly state when payment is due and what will happen if payment is not received
Get to know your customer
It’s vital you know the background of the person you’re working with. This information can help you decide what credit limit to set, or whether to stay away from certain businesses altogether. Providers such as Creditsafe or Experian can help you get this information.
There is no better way to get a sense of character than by word of mouth. Business associates will be please d to sing the praises of good contacts.
Invoice on a timely basis
Credit control starts with the invoice. Send it out promptly, accurately and to the right person. The quickest way to do this is to send it via an email and ask for a read receipt!
Payment chasing should be a tight operation
Use a good system such as Xero to send reminders when payment is due. Be sure to make a telephone call or send a letter as soon as an invoice becomes due. Get your customer to learn your credit control process by regularly contacting them.
Employ an experienced credit controller
If you have the resources, employ a credit controller, or outsource to a company with expertise. Don’t leave it to the sales team!
Flexible payment methods
Modern businesses should offer a range of payment types. Options include credit card payments, paypal, and other website payment methods. There may be a small charge to pay but the payment could be received far earlier.
These are just a few tips that we give to clients to help them stay on top of their cashflow. Every business is different and some methods work better than others depending on their circumstances. Please contact us to discuss any specific issues you may have with collecting money.