Advice:The cheque’s in the post??

By , published on 13th December 2010

With late or non payment on the increase in business, here are 10 ways to improve your credit control and maximise cash flow:

  1. Ask your customer to complete a credit application form

    Obtain all relevant contact and bank details, including registered office and registration number if it’s a limited company, or full names and addresses of ALL partners if a partnership. Make sure it’s been signed and dated by the customer.

  2. Check creditworthiness of new customers

    Get credit references from your customer’s bank and its key suppliers. Use a credit reference agency for a more comprehensive report.

  3. Agree payment terms in advance

    Make sure your payment terms are clearly stated both verbally when orders are placed and on all paperwork that follows. Include charging interest on overdue accounts as allowed under Late Payment of Commercial Debts (interest) Act.

  4. Send invoice when goods are dispatched to your customer

    Invoice within 24 hours of a chargeable event. Remember nothing happens until your bill gets into your customer’s payment process. The sooner you invoice, the sooner you get paid.

  5. Check all invoices are sent to the correct address

    Remember the invoice address can often be different to the delivery address. Make use of technology – send invoices by email where appropriate.

  6. Send a statement of account

    Customers generally pay on time, or when reminded. Sending a statement showing overdue invoices will usually prompt payment.

  7. Develop a ‘friend’ in your customer’s company

    This can prove invaluable when you’re chasing an unpaid invoice.

  8. Chase late payers promptly

    Phone overdue accounts, chasing the largest and oldest debts first. If no response, you must write a formal letter, followed by a final reminder letter seven days later advising legal action will follow.

  9. Don’t allow customers to exceed credit limits

    Credit limits have been set for a good reason; don’t allow them to be exceeded without your permission.

  10. Set up a stop list

    Make sure all staff know which customers are on stop and do not allow any more orders to be taken without payment of outstanding invoices.

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Janette Whitney

About Janette Whitney

Janette Whitney is an award-winning business consultant, media columnist and award-winning business author. She specialises in business growth strategies and finance and formed her consultancy business after a highly successful career in banking. Janette’s expertise has won her both national and regional awards which include ‘Consultant of the year’ and ‘Business Book of the Year’ award (as co-author of ‘The Essential Business Guide’).

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