Slow paying customers can have a devastating effect on your business cash flow but many business owners find this a difficult area to deal with. How do you put pressure on them to pay on time without running the risk of losing them?
Firstly, you need to have a process for dealing with slow paying customers, and you need to start by asking yourself the following questions:
– Are they a “can’t pay” or “won’t pay”
– Why would you continue to supply a “won’t pay”?
– Do you try and stick by your “can’t pay” customer hoping they come good?
Have clear steps you follow to chase payments, depending on each circumstance as outlined below.
You should always be sceptical of excuses like: “I haven’t received your invoice”, and respond appropriately. Check the address is correct. If it is, then immediately email/fax another copy on the invoice and phone to confirm it has been received. Then ask when payment can now be expected.
“The cheque is in the post” is another famous one: Ask for the date it was posted and the cheque number. If they tell you that the “invoice hasn’t been passed to accounts yet”, then ask the person who made the order to authorise payment and follow up phone call to the accounts office to ensure they have done so
If you are told “Your invoice is on the next cheque run”, then ask when the next cheque run is, call a few days in advance to make sure your invoice is going to be paid.
Don’t be afraid to be firm but always be aware of the human factor, and that sometimes a delay at their end has been genuinely unavoidable. Throughout the credit control process, maintain a positive personal relationship with your customers – you are more likely to get the result you want if you adopt a friendly approach.