{"id":198,"date":"2014-10-26T08:02:15","date_gmt":"2014-10-26T15:02:15","guid":{"rendered":"http:\/\/creditcontrol.me.uk\/?p=198"},"modified":"2017-04-13T14:17:02","modified_gmt":"2017-04-13T21:17:02","slug":"making-sure-you-get-paid-on-time","status":"publish","type":"post","link":"https:\/\/www.creditcontrol.me.uk\/making-sure-you-get-paid-on-time\/","title":{"rendered":"Making Sure You Get Paid on Time"},"content":{"rendered":"<div class=\"post-content\"><p>It is all very well selling the best goods or services, but if you do not get paid what&#8217;s the point? To help you ensure that you are paid on time, we shall examine:<\/p>\n<ul>\n<li>pragmatic collection methods<\/li>\n<li>the steps you can take to prevent late payment<\/li>\n<\/ul>\n<h2>Preventing Late Payment<\/h2>\n<p>The average time span in the British Isles from the point of sale until receipt of payment is 77 days. Considering trade credit terms are usually 30 days, this is indeed a poor record. Some companies pay quicker than average, so some companies are paying later than the 77 days quoted. Allowing your customers to dictate payment terms leads to many businesses failures.<\/p>\n<p>So what can you do to reverse this trend? You should:<\/p>\n<ul>\n<li>take the initiative with collections<\/li>\n<li>start your collection practices early<\/li>\n<li>avoid giving your customers an excuse to delay payment<\/li>\n<\/ul>\n<p>You have seen what credit can cost your business. Preventing accounts becoming overdue is far easier, and offers better business prospects, than chasing for late payments.<\/p>\n<h3>Collecting as a customer service<\/h3>\n<p>Your first duty is to your business and employees. You can eliminate the obvious credit risks, but you will not eradicate all of them. The next step is to ask for the payment due to you. There is nothing shameful in expecting to get paid for the goods or services delivered. You pay your workers at the end of every week or month for their labour, without them having to demand it. So why should you wait for your money? Some businesses deliberately retain payment until they are asked for it. So the earlier you start asking for payment each month, the faster you will be paid.<\/p>\n<h3>Removing excuses<\/h3>\n<p>Starting your collection procedures two or three weeks before payment is due will not upset your customers providing you do it tactfully. Your first telephone call, say a few days after your customers have received their invoices must:<\/p>\n<ul>\n<li>confirm the goods have been delivered<\/li>\n<li>establish there were no shortages or breakages<\/li>\n<li>agree the invoice totals are correct<\/li>\n<li>confirm the invoice will be processed before the customer&#8217;s cut-off date<\/li>\n<\/ul>\n<p>Note that the aim of the conversation early in the collection cycle was not to demand or ask for payment. But you did establish that your customer had no complaints, and that they got what they ordered, when they wanted it, and there were no mistakes with the invoice.<\/p>\n<p>If they had stated for example that the invoice totals were incorrect, or only two dozen items were delivered instead of the three dozen which were invoiced, you would have had sufficient time using your customer complaints system to rectify the problem before the period of credit expires. This leaves your customer no option but to pay on time. You have taken away the excuses customers rely upon to delay payment.<\/p>\n<h3>Taking a short cut<\/h3>\n<p>To keep your sales force contented let small initial orders of, say, up to \u00a3500 through, while you are undertaking the credit vetting procedures. Using the above methods will allow you to accept these small risks, while at the same time keeping control of your credit.<\/p>\n<h3>Targeting larger accounts<\/h3>\n<p>Of course it is not possible to telephone all your customers each month. There simply would not be enough time. One of the ratios of particular interest here, the sales\/customer ratio of 80\/20 \u2014 as 80 per cent of your sales ledger balance will be owed by just 20 per cent of your customers. By concentrating your telephone activity on this 20 per cent you will target the greater part of your sales ledger debt. The remainder of your debtors can be contacted by post, using a series of collection letters known as a letter cycle.<\/p>\n<h3>Saving on interest costs<\/h3>\n<p>Utilising the above system to prevent late payment of your accounts will give a dramatic boost to your cash flow. If you are operating on an overdraft the saving in interest charges can be substantial. These savings could also be used to expand your business. When using this pre-emptive method of collection, you will find it usually takes three months of operation before the results are achieved. John writes and works for <a href=\"http:\/\/www.proforensics.ie\/\" target=\"_blank\">Proforensics a Forensic accounting company in Ireland<\/a>.<\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>It is all very well selling the best goods or<a href=\"https:\/\/www.creditcontrol.me.uk\/making-sure-you-get-paid-on-time\/\">Read More<i class=\"fa fa-long-arrow-right\" aria-hidden=\"true\"><\/i><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"_links":{"self":[{"href":"https:\/\/www.creditcontrol.me.uk\/wp-json\/wp\/v2\/posts\/198"}],"collection":[{"href":"https:\/\/www.creditcontrol.me.uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.creditcontrol.me.uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.creditcontrol.me.uk\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.creditcontrol.me.uk\/wp-json\/wp\/v2\/comments?post=198"}],"version-history":[{"count":0,"href":"https:\/\/www.creditcontrol.me.uk\/wp-json\/wp\/v2\/posts\/198\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.creditcontrol.me.uk\/wp-json\/wp\/v2\/media?parent=198"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.creditcontrol.me.uk\/wp-json\/wp\/v2\/categories?post=198"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.creditcontrol.me.uk\/wp-json\/wp\/v2\/tags?post=198"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}