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4 tips to help your debtor management

4 Tips to help your debtor management

4 Tips to help your debtor management

It’s not easy to request payment right now, but it is important to keep cash flowing into your business so you can cover expenses and meet your obligations to others.

As with all business dealings right now, a little empathy and a lot of open communication can go a long way.

The following tips might be useful to keep in mind when you are asking for payment.

Communication

Connecting with your customers is important. Try to make it personal to their situation rather than a one-size-fits-all email.

Connecting on a more personal level shows you value them and are conscious of the impacts that the current situation may be having on them. The empathy you show now will also be remembered when business returns to normal.

And, be proactive . Early communication will help you stay on top of cash flow and will also alert you, if you need to account for late payments.

Add value

Use your expertise to give something back. Surprise and delight your customers by offering something over and above your usual services.

It could be as simple letting customers know you want to help and being open to requests, offering a one-off discount or an offer just to chat one to one.

Offer flexible payment options

For customers who can’t pay in full, consider breaking invoices into multiple payments with payment terms moved to a longer timeframe.

Set up a credit card facility to give customers other options for payment. After all, the easier you can make it for them to pay you, the quicker you will get paid.

If you don’t have payment services set up in your Xero account, we can help you do this.

Offering a discount for early payment might provide the incentive for customers who can settle, to pay your invoice before others.

Set up debtor management apps

Debtor management apps allow you to automatically send payment reminders, provide cashflow forecasting, automate and tailor debtor communications, and more.

Dedicated debtor management tools help you to collect your debtors faster.

Keeping cash flow going is vital for your business so the earlier you can communicate with customers the better.

Collect your debtors faster

Collect your debtors faster

Did you know that you still have to pay tax on your debtors, even if you haven’t yet collected them?

This is because you pay tax on your sales figures, whether you’ve collected the cash or not.

So, how do you collect your debtors faster?

  • 1
    Agree your payment terms at the time of sale
  • 2
    Ensure your customer signs your Terms of Trade before you start the job
  • 3
    Include a guarantee in your payment terms
  • 4
    Invoice as quickly as you can
  • 5
    Ask for a deposit prior to starting the job
  • 6
    Change your payment terms to within 7 days of invoice or on delivery
  • 7
    Send statements religiously at the start of the month
  • 8
    Have someone other than the owner be responsible for collection of debtors
  • 9
    Document any changes to your standard payment terms in writing
  • 10
    Use an integrated payment gateway app
  • 11
    Don’t provide credit to customers who’ve been late payers in the past, and don’t offer more credit to customers with outstanding payments

Don’t procrastinate on your debtors. Establish clear payment terms and ensure you stick to them.

Need help finding an integrated payment gateway app to suit your business? We can help. Get in touch!

“It’s the squeaky wheel that gets the oil.” – Anon

Need help finding an integrated payment gateway app to suit your business? We can help.