Improve your 2020 Payment Performance With These Four Tips
There are numerous ways that your business can improve payment performance; this improvement does not just apply to your credit control department but can span the entire order to cash process.
How to improve payment performance:
Due diligence should be your first port of call when dealing with a potential customer; this will reduce the risk you have of getting paid late or not getting paid at all. Whilst I wouldn’t underestimate your initial ‘feeling’ with regards to a customer, this should not be relied upon, credit checking can be a very useful tool, not only to ensure these isn’t anything untoward there, but you may also discover something positive with regards to the potential customer, i.e. their payment performance (if they declare it) is very good. Carrying out due diligence is a fairly easy way to start of a business relationship in the correct manner, and can potentially save you a lot of sleepless nights worrying about your cash flow.
Appropriate payment terms
Typical payment terms for the UK are 30 days from month end; that being said, you may find that to maintain your cash flow you need to be paid faster, at 14 days for example, or you may even consider having 14 day payment terms, to limit your risk of customers going over the 30 day limit that your cash flow requires.
Have an appropriate collection strategy in place
Your collection strategy should be structured and consistent, without being overbearing or annoying to your customers. That being said, should you customer be ignoring your chasing or be dismissive of you when you contact them, don’t be afraid to be persistent, that may spur them into wanting to pay you quicker. If a customer gets to this stage, in which continually contacting them to the point you become an annoyance is the only option, I would strongly suggest your take a view on whether or not to continue trading with them.
Don’t be afraid to get firm
One of the more common reasons for payment performance suffering is a lack of awareness of how to be firm in an effective way. Many companies take the soft approach so that they don’t rock the boat with their customers; you can be firm with your customers without being threatening. Going back to my previous point, having a structured collection strategy should also provide your customer with a structure as to payments, they should know when to expect your call and when they should be making payment to you as the process continues. Businesses can sometimes forget that you have carried out the work for your customer (keeping your end of the contract), you deserve to be paid for said work (for your customer to keep their end of the contract).
These are just a select few tips on how your business can improve payment performance, there are many more aspects that can help to achieve this. Our Improving Collection Performance training can provide you with an in-depth insight into your collection activity, book your place today.