The contract has been agreed, the T&C's signed, a credit check done, the purchase order obtained and works completed or goods delivered. The invoice has been sent to the customer.
What do you do next to ensure you get paid on time?
Maybe if you just wait, then people will pay you eventually, but there’s a cost to letting your customers hold onto your money beyond agreed terms – you are effectively financing their business interest free - and that money could be working for you instead. It’s your money after all and it could be used to pay down an overdraft, invest in your business or even return capital to the owners.
Not every business has people with the time available to follow these best practice procedures for not-yet-due invoices. Companies can also be fearful of upsetting important customers by calling to ask about payment. Fortunately, credit control can now be accessed as an outsourced service, which has the added benefit of depersonalising things.
Our experienced credit controllers are polite and professional, find out more about our outsourced credit control service here.
It's good practice at the halfway point during the terms to put in a polite call or email to the customer's accounts payable department just checking that they have received the invoice and whether it has yet been approved for payment by the due date.
For instance, if your terms are 30 days, do this 15 days before the invoice is due. If there is more than one invoice due it might be useful to attach a statement of account at the same time. Doing this at this point in the month means you can easily resolve any queries the customer might raise in plenty of time to still be on the month end payment run. These could include a request for a copy invoice (where the invoice was not received) or a proof of delivery.
If the customer advises the invoice has been received but not yet approved suggest to them that you will contact them again next week to check progress. If you are advised it is approved for payment ask how it will be paid for example by bank transfer or cheque and obtain the date it will be processed, also always take down the name of the person you spoke to.
If you call back the following week you are advised it has still not been approved ask who the invoice is sitting with and how to get it approved. Chances are it needs signing off by the person who requested the goods or service – if this is the case contact them directly, point out that their accounts team advise the invoice is with them for approval and ask if they could please sign it off.
If you don't get a response try again in five days' time. Use the same approach as for your first contact, pointing out you want to check the invoice has been received and approved. It's important to try and not upset the client by asking for a payment date straight off as the invoice is not yet even due, so the tone of your email or call is very important.
On the last working day of the month send out statements to all clients making sure that they are being sent to the accounts department and not the sales contact.
Your goal should be to get your customers to the point that when they see your invoices in future they deal with them in a timely manner – otherwise they know you would soon be in contact! Many suppliers will not pay until chased at least three times so if you can make these contacts before the due date it will stand you in good stead of getting paid on time.This proactive approach should see your invoice paid on time and the more you chase clients in this manner the more they will know you are serious about your credit control!
Of course, your alternative is to let My Credit Controllers take the strain and do it all for you with credit control as a service.
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