We’ve all been there. You invoice a customer promptly, include all relevant payment details in your email, but when you come to check your accounts on the due date, no payment has been made.
You spend the next few days being passed from pillar to post. Sarah needs to sign off the invoice but she’s on holiday, Martin needs to add you to a list of preferred suppliers, but he only works Mondays and Tuesdays. Meanwhile, every day that passes negatively affects your business’ cashflow.
It doesn’t have to be this way. Follow these seven best practice tips to ensure faster payment from your customers.
Winning a new customer is an exciting time for your business, but it’s important that you start off on the right foot.
Remember, customers who owe you money are less likely to book work with you in future, so don’t offer them credit unless you’re sure they’ll be able to pay on time.
It’s better to build a trusting commercial relationship over time through regular, prompt payment than to offer overly generous payment terms before that trust has been built.
They might be a well-known company or even a good friend, but unless you’ve run proper risk analysis on your customers, you have no way of knowing what their credit score is and how promptly they pay their bills.
Use a professional risk analysis tool—such as Satago—to find out your customers' risk band before you agree your payment terms. Remember, the right terms are always the ones that work best for you.
Card, BACS, Cash? People pay their bills in different ways and many businesses have lengthy processes which can cause delays. When sending an invoice, make sure you get the contact details of the person who will be processing your payment so you can confirm:
Often, invoices are paid late for simple reasons, such as the right person being on holiday. By sending a reminder a week before your payment is due you can avert these issues before they become a problem.
This is where automation can really help. With Satago, you can set automated payment reminder emails, monthly statements and thank you emails to send on specific days before and after payment is due.
Keeping a trail of communication with your customers can be crucial if queries arise around payment.
What if finance loses the original invoice? Or the person who booked the job leaves the company? Whatever happens, by keeping a record of all emails and calls, you can ensure you have all necessary information to hand should a dispute arise.
Even if you do everything by the book, late payments can still occur. When this happens, it’s important to follow a consistent strategy to ensure payment is made as soon as possible:
It’s important to continue analysing your customers over time. If their credit score improves or they earn your trust through regular prompt payment, you can reward them with more generous terms.
On the other hand, if an existing customer’s credit score declines, you may need to adjust your payment terms to avoid putting your business at risk.
Satago monitors all your customers automatically and notifies you of any changes to their risk profile, so you’re always on top of things.
At Satago, we’re committed to supporting SMEs through automated credit control, data-driven risk insight and flexible invoice finance, to learn more, book a demo with the Satago team today.