An outline of self-reflection, for businesses who are suffering from slow Cash Flow. Preventative actions each business can take, to keep themselves right.
What we’ll talk about today, is how to get a Sales Ledger ready to collect late-payments, as well as some real world actions to prevent them. This concerns the stage before late payments fall into arrears (debt).
Good Payment Practices
What does this mean exactly? Let us provide you some examples of such:
Set clear payment terms, and effectively communicate them to customers or clients. Consider including a short statement within your invoices, a small reminder of the time period in which you expect the invoice to be paid.
Offer multiple ways for your customers or clients to pay. This mainly regards frequency, when applicable. If you are a regular provider of goods, for example, provide some options (weekly, bi-weekly, monthly, etc.).*
*Ensure, however, that incoming transactions all find their way on to one comprehensive Sales Ledger document in the end.
Doing things this way also contributes to your own effective invoice management from within. When you declare an agreed-upon deadline from the date of invoice, and integrate this into your business’ policies, it decreases the chance of a false payment-dispute.
It just keeps all parties on the same page.
Unfortunate as it is, we must point out that if you frequently encounter false payment-disputes, it may be time to reflect on your internal financial policies and processes.
XFS Limited can mediate for you in the case of a payment dispute (false or otherwise). We assume the role of neutral third party, working to achieve the correct, but also hopefully amicable and positive result in the end.
Efficient Sales Ledger Mgt.
Up-to-date, accurate information regarding contact details, accounting information, as well as payment records (both incoming, and outgoing).
Invoice management software can give you the tools to keep all these records, however they are only helpful if you use them effectively;
If you make a pie using bad apples, you’ll end up with a bad apple pie.
This is a popular concept right now. It regards the importance of inputting quality data into software systems. Regardless of what kind of tool you are using, it is not a magic wand.
It is critical to have good oversight of payments, especially if payments all come in different methods and frequencies, instalments and such. For these kinds of situations, it can be complex to put a firm process in place around how you use the software. For this specific kind of scenario, we recommend seeking external help as the most cost effective, and painless solution. If you find yourself in a muddle, there is nothing at all wrong with looking for a professional service to help you out of it. This will always be a better option than letting problems fester.
Late-payment Planning
How does the business handle late payments; follow up communications? What happens when the customer/client has been contacted two or three times without response?
How long do you usually wait before taking action in such a scenario? Do you ever take action? Be sure to send one, or two follow up emails when you encounter a late payment.
There are many ways to address these issues. It depends on the scale of your business, the regularity of late payments, how your Ledger is currently managed, and many other factors. This is how we assess your situation, and build a strategy for your specific business.
It is not something that anyone wants, yet you still must plan for it proactively. Those who are worried that they cannot pay should have a clear path to communication with a party who can potentially authorise a change in payment terms.
Small steps such as this can build strong relationships with your valuable customers, or clients. The root of the word “confidence”, is confide. XFS Limited provides everything we've covered today as a service; XFS Flow. If you lack the resources to ensure these kinds of things are being done regularly, then our services are perfect for you. We can do all of this on your behalf, plus more. Have a look at our website to find out more about everything we offer. We also provide Debt Recovery, as well as general outsourced communication; such as call handling, communications and complaints management.
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