Debt Collection - Business Victoria Breakfast

How to make your customers
Jason Cunningham
pay on time
(C) Jason Cunningham 2013

“…make them pay…”(C) Jason Cunningham 2013

Proclaimer
(I mean disclaimer –
I always get them
confused…)
This information is for illustrative purposes only and
does NOT constitute advice.
Always speak to your accountant or business adviser
about your specific situation before making a decision
regarding how to improve your business.

Importance of cash flow
The lifeblood of all businesses
When you’re making money, all
other stresses are manageable
So you get paid!

Lack of communication
at start of relationship /
engagement
No debtors process in
place
Only act once there’s a
problem – often too late

Preventative measures
Engagement Authority
Build into your process for dealing
with clients
Set up a debtors policy and process
“Just following the process…”

8 ways to
make them pay
fifocapital.com.au(C) Jason Cunningham 2013

1. Send your invoice
on time (same day)

1. Send your invoice on time (same day)
One of the first things that needs to be done is
to get your invoice to the customer quickly or
on time. Without an invoice you can’t get paid
- so, don't wait to do this.
On Time: Send your invoice out the day the
work has been done or goods delivered to your
customer.

2. Clearly state your
terms on the invoice

2. Clearly state your terms on the invoice
On Terms: Your invoice needs to include the due
date, 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 due
date it needs to be paid.
Remember, if you don’t have a formal trade
agreement with your customer, then you’re
leaving on-time payments to chance.

3. Get your invoice right

3. Get your invoice right
All invoices need to follow the ATO’s standard invoice
rules to ensure it is valid, plus other information to
make 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 or
how to pay by cheque incl. name and mailing address.

4. Incentives to pay early

4. Incentives to pay early
Offering your customers a percentage discount
for paying early can often motivate customers to
pay early (or at least on time).
But, offer early payment discounts with caution as
quite often customers will start to pay outside of
terms but still expect the discount.
If you choose to consider discounts, consider
building it into your margins.

Follow up invoices the moment
they become overdue
Moose Rocco
5.

5. Follow up invoices the moment they
become overdue
Always follow-up invoices the moment they become overdue. SHOWS YOU MEAN
BUSINESS.
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 the
payment is received.
Set-up automated “Overdue Invoice” statements or letters using red ink in the
heading.
When contacting the customer, remember your relationship remains critical, so
conduct these calls in a friendly and courteous manner. More often than not, they’ll
feel embarrassed and be apologetic.
If it is a new customer, contact their accounts payable person 3 days prior to the first
invoice batch due date as a “friendly call to see if all is OK for payment?”.

6. Escalate to your key contact(C) Jason Cunningham 2013

6. Escalate to your key contact
If the invoice is well overdue, say, over 21-28 days, always
look to escalate your query to your key customer
relationship point. Once again, the conversation should be
friendly and courteous. Don't be embarrassed to make the
call. It's business.
If, however, there appears to be a broader issue around the
invoice non-payment, then quite often professional
assistance can be the best form of recovery. Such action
should be considered carefully but always acted upon in a
timely manner - don't let it go on too long as the longer you
leave it, the harder it will become to get paid.

7. Alternatives for slow payers
Fifo Capital (www.fifocapital.com.au)
Cash flow solutions: Debtor financing / debt
factoring

8. Get help: Business Victoria
online tools
www.business.vic.gov.au

Thanks…
www.thepractice.com.au
@jasecunningham
growmymoney@thepractice.com.au
Email
growmymoney@thepractice.com.au
to get a FREE copy of
Jason’s Special Report:
Budgeting Secrets Revealed
Get Jason’s Mum’s favourite
self-help money book,
Where’s My Money?

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