Log InTo stay profitable and afloat your own business needs to be able to pay its bills and have invoices paid on time. Unfortunately, it is common to see invoices remain unpaid for long periods of time affecting your ability to grow your Birmingham-based business.
If you find yourself in the predicament of having to deal with customers who do not pay, we have listed a few things that you may wish to consider in order to help your business thrive.
Chasing debts is not an easy process
Getting your customers to pay their invoices is rarely a straightforward process. It’s often time consuming, involving frustrating and difficult conversations with customers needing constant chasing and reminding. This costs you both time and money.
Ideally, you will never have to chase debts, though the reality is much different. The best way to reduce the amount of time you are waiting for payments is to ensure there is an easy and timely process of sending reminders. Prompting payments and reminding the customer of how much they owe will increase the likelihood of them paying as they are continually notified of outstanding payments and important dates.
Remaining on good terms with your customer is what ultimately keeps them loyal and coming back to you time and time again. However, it is important to question whether or not it is in your interest in continuing to supply goods and services to customers who persistently pay late or not at all.
We recommend that you ask for payment by BACS bank transfer or payments over the phone. This information together with your payment terms should clearly be stated on all invoices, statements and reminders.
Stopping repeat debtors
Again, your customers are one of the most important elements of your business, they are the part that helps you to pay your bills and enable you to keep growing. However, customers who do not pay cost you money and reduce profitability. To stop customer relationships from being affected and you from becoming frustrated, we recommend stopping future transactions with customers until their existing debts are paid, this stops you from being taken advantage of.
You can’t collect on all debts
The unfortunate reality of outstanding debts is the fact that your customers are probably having financial issues. If a customer has their own cash flow issues and enters insolvency, such debts can take longer, and be more difficult to recover.
We would always recommend credit checking a new customer before extending credit terms and also to consider taking part or full payment prior to supplying goods or services. These simply actions will help to avoid future bad debts.
Debtors affect your business
The reality of you having unpaid invoices is that it may affect your ability to pay your own bills. It’s good practice to make sure that your accounts and cash flow forecasts are up to date so any issues can be quickly identified. We also recommend that you do not rely solely on a small number of customers, that you have a large enough customer base to support your business if a few of those were to experience issues, or begin leaving unpaid invoices.
Choose the right debt collection agency
When it comes to enlisting an agency to collect your debts, it's a good idea to establish contact with a debt collection agency before you need them. This enables you to choose out of luxury rather than necessity and ensures you know the whole process and that you have picked the right agency for the job. A good debt collection agency will be upfront and honest, keeping you informed of the whole process.
An agency will take the strain off you having to recover your own debts and free you up to concentrate on other elements of your business. They will help recover your debt, together with any costs and interest that may be due to you, in a professional manner, normally on a no collection, no fee basis. If you have any outstanding debts you need collecting; or would like to know more about our services, please do not hesitate to get in touch with K2 Collections, we will happily answer any of your questions.