Top tips for dealing with debtors
How to get paid sooner, without feeling like a jerk
Let’s face it, you didn’t go into business only to waste hours on the phone chasing up cash from your customers. Dealing with debtors places a huge strain on your business cash flow. But chasing payments is frustrating. It’s awkward and embarrassing discussing money so directly with your customers.
Here’s 3 easy ways you can avoid those awkward debt collection calls
Have customers sign a contract
- Spell out your expectations clearly and from the outset by having your customers sign a supply contract with your business.
- This will set out your payment terms, and what happens if they’re not met by your customers. Penalties might include non-refundable deposits or cancellation fees, and a late payment fee.
- You can always choose to overlook these penalties as a goodwill gesture on a case-by-case basis. But having them protects you and lets your customers know your terms, avoiding awkward conversations.
Put a process in place
- No matter what business you’re in and what type of products or services you supply, have a clear process around orders and payments.
- In a retail style environment this is straightforward – a customer comes to the counter with their purchase, and they pay you. Whether you’re a plumber, builder, farmer or a chef, you can establish and use an equally clear payment process.
- When you submit a quote or discuss a proposal, include your payment terms. These could include payment of a deposit or supply of a credit card number to secure the customer’s purchase, and protect you in the event they won’t pay up later.
Hire help – or have your software do the dirty work!
- Consider removing yourself from the accounts receivable equation.
- Have a skilled and trusted employee process payments, and chase up those accounts that are still awaiting payment.
- Another option is to use invoicing software that automatically sends reminder and overdue notices to customers who haven’t paid.
- As these reminders and payment requests come from the software, and not from you personally, it helps prompt customer payments while avoiding those awkward conversations and dealing with debtors.
While its human nature to want to avoid these sorts of conflicts, often having an honest conversation about how these late payments are effecting you and your business with your debtor can mean avoiding costly legal action.