Credit reporting and receivables management company Dun & Bradstreet (D&B) said that while business owners often find themselves focused on the job at hand, the job isn’t really over until it has been paid for. D&B said that it is essential for a business’s health and cash flow to have a timely turnaround on all accounts. Accordingly, here are D&B’s top five tips on collecting payments (and limiting the possibility of acquiring a bad debt).
Record customer details
D&B said it is important to have all the relevant customer details you need before you deliver a service or product. Not all late payments are due to bad debt, so it’s a good idea to maintain the details of your customers to investigate the payment as it becomes overdue. “Additionally, customer details are also perfect for initiating a marketing strategy or activity, so it’s a good idea to keep them on file.”
Clearly state trading terms
As D&B said, not all late payments will be a result of bad debt. Sometimes customers will forget to pay due to poorly devised invoices. “In order to help guarantee your payments it’s essential you outline your company’s credit policy, the due date and total amount owing on the invoice.” By providing all these details, D&B said you equip your customers with the information they need to make a prompt payment.
Offer early discounts
Sometimes customers will need an incentive to make early or even on-time payment, and D&B said it is common for debtors to ignore your invoice if they don’t see it as a priority. One way to confirm the importance of your invoice is by offering a discount for early payments. “Customers will always try to make savings wherever possible, so even a minor discount of 5% is enough to confirm a prompt payment.”
Keep in telephone contact
It can be too easy for customers to ignore a letter or email that outlines the payment they owe. D&B said that telephone follow ups have a higher chance of success, largely because it is a lot more difficult to ignore a phone call. Another major benefit of a telephone follow up is that you are guaranteed direct communication with your debtor if they answer, which is never the case with an email or letter.
Refer to a collection agency
Debt collection agencies are designed to collect payment for delinquent accounts. D&B’s advice, if you find yourself spending too much time or resources and still not getting anywhere, is that it may be worthwhile outsourcing your debt collection. “Agencies deal with debt collection everyday, so it’s only natural that they are better positioned to reclaim money.”
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