How To Get Your Money
By Sara Clemence, American Express Open Forum
It’s old news now that many businesses, feeling the recessionary pinch, have been delaying payments to their suppliers. In boom times that might not create a crisis, but until the downturn ends, cash flow is probably a paramount concern. The following tips should help you get the money you’re owed.
If you drag your feet on invoicing, you essentially keep cash from coming in. Plus, the longer it takes to get paid, the less likely you are to get paid. Stay on top of your accounts receivable, and send bills out promptly to get paid earlier and show that you are paying attention to outstanding balances.
If you bill weekly instead of monthly, you won’t be waiting until the end of the month to send out invoices—and can get paid faster. If weekly is too much to handle, try biweekly instead.
Errors and incomplete information can keep your customers from paying on time—and these days, you don’t need to give them any excuses. So double-check those documents and call a late customer to make sure they have the details they need. In a recent survey by finance systems firm CODA, almost 17 percent of respondents had seen payments of more than $50,000 held up thanks to invoicing errors. (For more information, see http://www.webcpa.com/news/30910-1.html)
Check Credit Histories
Do this even for customers who have paid on time in the past. Be ready to cut back on credit lines for those who are showing spotty records, and if you see problems with a company that has always been prompt, make a call to assess the situation. Better to know about problems now than later. Ask how you can help—it may get you to the head of the priority payment line.
Call Three Times
Ring your customer right before the invoice goes out, to make sure the goods showed up, review any problems, confirm the payment terms and make sure the bill is going to the right person. That will help ward off nasty surprises. Call two days after the invoice goes out, to make sure it was received. Finally, call the day the payment is due—especially if you’re offering early payment discounts.
Be sure you’re communicating with the appropriate person in the company; your chances of being a priority payee goes up if you have established a personal relationship with them.
Strike the Right Tone
Be polite and friendly, but also clear and firm. BNET offers up an example for a letter: “In a few days, decisions must be made on accounts that are seriously past due. Your goodwill has always been important to us; that is why we are reluctant now to take any action that might jeopardize your credit standing and cause you added expense…” The same principles hold true for phone calls.
Offer a Discount
It’s better to be paid something rather than nothing. If your customer is having cash flow problems, see if a 15 percent discount will help them pay off the balance. (And make clear that this is a one-time-only deal.) Or, see if you can both agree to an installment plan—say, paying a third now and the rest in two other chunks on specified dates.