In an ideal world, you invoice a client, you get paid and you move on.
What happens when payment is elusive and you can’t quite figure out where you went wrong? Credit control is all about managing any factors that might get in the way of payment, limiting these and making it easier to get paid promptly.
These 3 tips will help you get paid on time.
Set expectations upfront
When taking on new clients, make sure you have a clear understanding of their payment processes. This can include:
- Where to send invoices
- What set payment cycles they have
- Any specific information they might need to be included on an invoice.
From your perspective, this is a great time to talk about your payment terms. If you require prompt payment (i.e. within 7 days) confirm this is achievable their end. We recommend you put all this in writing and get it signed.
A little bit of time up front will save you in the long run.
Stay on top of late payments
Yes, we know - it’s always a slightly awkward conversation to have, but picking up the phone to chase late payments is the way to go. You might discover that the invoice has wound up in the wrong place or has been put aside due to an issue that needs addressing.
Having a frank conversation is often the quickest way to sort out any problems. If there isn’t a valid reason for a late payment and you’re several conversations deep, consider charging late fees.
Get the right tools to do the hard work
As a business grows, so does the number of invoices rolling out the door. Keeping track of payments can easily fall by the wayside, which is why employing the right tools for the job is invaluable.
Credit control software will automate the trawling through emails and bank accounts and collate everything you need to know into a centralised resource. It’s a great way to save on time and headaches.
You may find this guide from Xero useful. Compiled by the experts from Chaser, they identify some common mistakes - Credit control policies and procedures for small business.