Debt Collection - Business Victoria Breakfast


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Jason Cunningham from The Practice talks about the best ways to get people to pay on time and stay on top of your cash flow

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Debt Collection - Business Victoria Breakfast

  1. 1. How to make your customersJason Cunninghampay on time(C) Jason Cunningham 2013
  2. 2. “…make them pay…”(C) Jason Cunningham 2013
  3. 3. Proclaimer(I mean disclaimer –I always get themconfused…)This information is for illustrative purposes only anddoes NOT constitute advice.Always speak to your accountant or business adviserabout your specific situation before making a decisionregarding how to improve your business.(C) Jason Cunningham 2013
  4. 4. (C) Jason Cunningham 2013
  5. 5. Importance of cash flowThe lifeblood of all businessesWhen you’re making money, allother stresses are manageableSo you get paid!(C) Jason Cunningham 2013
  6. 6. Lack of communicationat start of relationship /engagementNo debtors process inplaceOnly act once there’s aproblem – often too late(C) Jason Cunningham 2013
  7. 7. Preventative measuresEngagement AuthorityBuild into your process for dealingwith clientsSet up a debtors policy and process“Just following the process…”(C) Jason Cunningham 2013
  8. 8. 8 ways tomake them Jason Cunningham 2013
  9. 9. 1. Send your invoiceon time (same day)(C) Jason Cunningham 2013
  10. 10. 1. Send your invoice on time (same day)One of the first things that needs to be done isto get your invoice to the customer quickly oron time. Without an invoice you can’t get paid- so, dont wait to do this.On Time: Send your invoice out the day thework has been done or goods delivered to yourcustomer.(C) Jason Cunningham 2013
  11. 11. 2. Clearly state yourterms on the invoice(C) Jason Cunningham 2013
  12. 12. 2. Clearly state your terms on the invoiceOn Terms: Your invoice needs to include the duedate, as detailed in your agreed terms of trade.For example, if the agreed terms are 30 days,then, state “30 days” plus insert the actual duedate it needs to be paid.Remember, if you don’t have a formal tradeagreement with your customer, then you’releaving on-time payments to chance.(C) Jason Cunningham 2013
  13. 13. 3. Get your invoice right(C) Jason Cunningham 2013
  14. 14. 3. Get your invoice rightAll invoices need to follow the ATO’s standard invoicerules to ensure it is valid, plus other information tomake paying the invoice simple for your customers.Such as;• It must say, “Tax Invoice”• Payment due date• Purchase order numbers• How to pay e.g. your correct bank account details orhow to pay by cheque incl. name and mailing address.(C) Jason Cunningham 2013
  15. 15. 4. Incentives to pay early(C) Jason Cunningham 2013
  16. 16. 4. Incentives to pay earlyOffering your customers a percentage discountfor paying early can often motivate customers topay early (or at least on time).But, offer early payment discounts with caution asquite often customers will start to pay outside ofterms but still expect the discount.If you choose to consider discounts, considerbuilding it into your margins.(C) Jason Cunningham 2013
  17. 17. Follow up invoices the momentthey become overdueMoose Rocco5.(C) Jason Cunningham 2013
  18. 18. 5. Follow up invoices the moment theybecome overdueAlways follow-up invoices the moment they become overdue. SHOWS YOU MEANBUSINESS.Have pre-set customer contact time(s) – for example, if the invoice is 3 days late,phone the customer on the 4th day. Repeat this step every 5 days until thepayment is received.Set-up automated “Overdue Invoice” statements or letters using red ink in theheading.When contacting the customer, remember your relationship remains critical, soconduct these calls in a friendly and courteous manner. More often than not, they’llfeel embarrassed and be apologetic.If it is a new customer, contact their accounts payable person 3 days prior to the firstinvoice batch due date as a “friendly call to see if all is OK for payment?”.(C) Jason Cunningham 2013
  19. 19. 6. Escalate to your key contact(C) Jason Cunningham 2013
  20. 20. 6. Escalate to your key contactIf the invoice is well overdue, say, over 21-28 days, alwayslook to escalate your query to your key customerrelationship point. Once again, the conversation should befriendly and courteous. Dont be embarrassed to make thecall. Its business.If, however, there appears to be a broader issue around theinvoice non-payment, then quite often professionalassistance can be the best form of recovery. Such actionshould be considered carefully but always acted upon in atimely manner - dont let it go on too long as the longer youleave it, the harder it will become to get paid.(C) Jason Cunningham 2013
  21. 21. 7. Alternatives for slow payersFifo Capital ( flow solutions: Debtor financing / debtfactoring(C) Jason Cunningham 2013
  22. 22. 8. Get help: Business Victoriaonline Jason Cunningham 2013
  23. 23. Thanks… get a FREE copy ofJason’s Special Report:Budgeting Secrets RevealedGet Jason’s Mum’s favouriteself-help money book,Where’s My Money?(C) Jason Cunningham 2013