Every business at some point in time, is going to have outstanding invoices to chase. When and how you go about this makes all the difference. It’s your money so protect it! In our latest article from The District Reporter, we give you tips on how to achieve the best results in debt recovery.
The amount of each invoice and the number of invoices can have a significant impact on your cash flow and so it is important to ensure that you have the best processes in place to recover these debts. Below are some tips we recommend to all businesses:
Put the contract in writing
Whether it is a “simple handshake” agreement, an ongoing supply to a regular client or a complex arrangement all matters should be put down in writing. This is to ensure that all parties know exactly what they are to do and removes doubt as to what the agreement is. It also allows you to put the client on notice from the start as to when and how you are to be paid.
Know who your client is
This is easy if it is an individual but more difficult if it is a company or other entity. Make sure that your contract is with someone that has the ability to pay. Many companies have limited liability and no assets so you need to make sure you can chase payment from the Directors in person.
Maintain clear records
Keeping copies of all contracts, agreements, letters, emails, texts, voicemails, dockets and forms is vital when it comes to proving that someone owes you money. Also keep internal notes of conversations can be of great assistance, especially when those conversations contain admissions of the debt being owed and acknowledgements of receiving the goods or services.
Follow up invoices early
Following up invoices early with the client is vital as it is during this time that they are still appreciative of the goods or services you provided. The longer you leave it the more time people have had to move on and forget about the great job you have done. You should develop a system to keep track of all outstanding invoices and send out reminder letters and make calls after certain periods of time have lapsed since the invoice was issued.
Seek assistance if there are warning bells
After you have done everything suggested above you may still have a few debts unpaid. The question then is what more can you do? There is always more than one solution to a problem and seeking expert assistance can often lead to your clients making payment immediately or renegotiating a payment arrangement. At CMC we have developed a streamlined and efficient debt recovery process that can be tailored to the particular circumstances and commercial needs of any business. We can also review your current systems to assist in minimising future debts, increasing cash flow and retaining proof of transactions. It is hard enough to survive in business without working hard for no return. It’s your money so protect it.
