Subscribe to our blog
In the world of the small business, cash flow is king.
Consistent cash flow is what keeps your business operating and, unfortunately, poor cash flow is one of the most common reasons for small businesses going out of business.
Keeping consistent cash flow is made that much harder by the fact that most small businesses are constantly being paid late.
The average small business in the UK is owed around £40,857 and collectively they are owed £50 billion, in unpaid invoices.
Just chasing those unpaid invoices and trying to keep their accounts receivables healthy takes the average business 10-hours a week. Time which could be spent far more profitably.
Given the importance of cash flow and the widespread issues caused by late payments, being on point with your credit control and debt collections efforts is incredibly important to your business.
So, to help you become the receivables and debt collections superstar you need to be, we’ve put together this list of easy to implement tips.
The easiest way to set yourself up as your business’s debt recovery and receivables superstar is to cultivate the right skills and abilities, including:
Patience can be hard to muster when your customers are repeatedly not paying you on time and, as a result, is putting your business in jeopardy. However, the unfortunate fact is that getting angry isn’t going to get you paid any faster.
In fact, it might end up putting your customers on the defensive, which is going to slow down the whole process.
We don’t have any tips on how to enter the zen mindstate that you need to stay calm and friendly when chasing unpaid invoices, that’s a personal preference.
What we can say is that, in our experience, taking a calm, measured, and persistent approach will always yield the best results when it comes to credit control.
If you’re running your own business, then there is a good chance that you’ve already got top-notch organizational skills and can bring them to bear on your accounts receivables.
A great way to cut down on the amount of work it takes to chase late payments is to make sure you have easy access to all the information you and your customers need to make prompt payments.
Having a credit control and debt collection policy in place is a great foundation for implementing effective credit control, acting as a consistent underpinning for all your efforts.
From there, you need to be able to track your invoices and payments, so you always know what’s outstanding and keep on top of your customer’s payment behaviour, so you know where to focus your efforts.
It’s an unfortunate fact that, for most small businesses, credit control is always an ongoing battle.
The reason that most small businesses plough 40+ hours a week into chasing late payments is due to the fact that sending just one email won’t cut it.
In order to become a debt collections and receivables superstar, you’ll need the persistence to chase the same invoice over and over again until it gets paid.
The good news is that we’ve got some tips and tricks that can help you out!
Once you’ve mastered the skills and abilities you need to make yourself a debt collections and receivables superstar, the next thing you’ll need to do is make full use of the resources available to you to elevate your credit control best practices, such as:
Credit control is a long-winded process and, even if done properly, is an unprofitable task that takes you away from growing your business and serving your customers.
Automating the process means you don’t have to do a lot of the drudge work and can refocus on more important tasks.
Chaser’s automated payment reminders mean you can schedule all of your emails chasing unpaid invoices in one session and they’ll be sent automatically without the need for your oversight.
All our emails can be edited to reflect your tone of voice, and you can even use our payment reminder email templates to draft them out.
All reminders will appear to have come from your business email account and our payment portals mean your customers will have all the information they need to make a quick payment. There’s a reason that our customers save, on average, 15-hours or more per week on their credit control activities.
We would always suggest that when you onboard new customers, you conduct a business credit check as part of your due diligence.
This can help you avoid customers with a poor credit history and a history of making late payments.
The information yielded by a business credit check can also help you to determine acceptable credit limits for your customers.
However, once you’ve onboarded a customer, the process doesn’t stop there.
Having a full understanding of your customer’s payment habits can help you focus your credit control efforts on the right people at the right time.
It can also help to throw up any red flags, like sudden changes in payment habits or requests for increased credit, before they become an issue.
Chaser’s hub brings all your accounts receivable and credit control data together in one place and has a full suite of reporting functionality that makes it easy to track and understand your customer’s payment habits.
Not everyone is cut out to be a receivables and debt collections superstar and, thankfully, not everyone has to be.
If your skillset lies in a different direction and you don’t have time or inclination to commit to persistent credit control, then perhaps it’s time to invest in someone who does.
Outsourcing your credit control efforts to a dedicated and professional team is far less expensive and time-consuming than recruiting and training new staff and you’ll have the benefits of a credit control professional working with you from day one.
The unfortunate reality is that most small businesses would rather write off bad debt than try and collect on it.
The good news is that debt recovery doesn’t have to be a painful process and you don’t have to lose out on the money you’re owed.
If the worst-case scenario has happened and your efforts to recover an outstanding invoice have failed, there are some steps you can take, including:
Having these ongoing and long term consequences for non-payment written into your payment terms can often spur companies to make good on their debt who otherwise would have been happy to wait it out to see if you’ll eventually give up and write it off.
Open and effective communication can often be used to resolve bad debt situations without the debt needing to be written off.
If the pandemic has taught us anything it’s how quickly economic conditions can turn sour and not all bad debt is the result of customers attempting to weasel out of paying their bills.
If you approach the situation in a sensitive manner and attempt to understand why your customer is not paying you, there are far more options to resolve the situation in a mutually agreeable manner than if you go in all guns blazing or just write off the debt.
Many small businesses are rightly wary of contracting debt collectors because of the length of the handover process and the impact that the traditionally harassing and aggressive tactics used by debt collection agencies can have on your business relationships.
The good news is that there is an alternative. Chaser’s debt collection services take a new approach to debt collection.
We act as mediators between you and your customers, finding the right solution to suit all parties.
We don’t use aggression or harassment, but instead, use polite persistence to get you the money you’re owed without ruining your carefully nurtured business relationships.
If you’re still struggling to implement effective solutions to your credit control problems, asking the experts is always a good idea. Book a demo with us today or start your free trial to find out how Chaser can help you become a receivables and debt collections superstar!