PULSE CASH FLOW

Cash Flow

BY PULSE CREDIT SOLUTIONS


Q. How can I get clients to pay invoices promptly and keep cash flowing into my bank?

A. Here are a few ways that you can reduce debtor days and improve cash flow. When they are implemented correctly and at reasonable cost in-house, the results are often favourable.

Firstly, check whether you have clearly defined terms and conditions on your invoicing, with properly defined payment terms and periods.

Always credit check your customers and consider the cost of bad debt protection. This must be done regularly as their status will change. If you take out credit insurance, monitor and report late payment, otherwise a pay-out will not take place.

Set credit limits and ensure these are not exceeded. If they are, withhold delivery of more goods until payment is received.

Issue invoices within 24 hours of delivery and think about re-negotiating credit terms to 30 days from delivery. Consider a pre-dunning call to ensure that there is no reason for non-payment. A telephone call at the earliest opportunity will always highlight a dispute. Therefore, you must ensure that you have the resources to solve disputes at the earliest possible time. If disputes are minor, consider negotiating part-settlement whilst the problem is being resolved.

Using an efficient credit control team, establish a systematic approach to issuing statements, sending chasing letters and making telephone calls. Keep notes of all conversations with debtors and always diarise prompt follow-up on any broken payment promises.

Consider email statements, they will educe postal costs.

As businesses struggle to maintain cash flow, it’s crucial to have a clear debt collection policy using a combination of letters and calls. Part of the collection policy should include legal redress and if all else fails use court system.

This article has been taken from ANGLIA BUSINESS.