As I mentioned before cash-flow is everything for small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer-, Professional-, Personal businesses, getting payed on time is one of the ways to keep your cash-flow up:
- Ask for your money – many people don’t do that because they are embarrassed to do so, in my opinion some one who is chasing payment is looking after his/her business and that makes you look more professional.
- Offer discounts – offer a 2% early payment discount, if payment is received within seven days.
- Statements early – some businesses or clients only pay after they had a statement, make it easy for them, sent an email statement with payment (online) option.
- Make it personal – know who makes the payments, get to know them and take a interest in their lives, ask to be on the next payment run.
- Go and collect – if calls don’t help pay a visit and ask for your money in person.
- Call at home – find out where the responsible person lives (Companies House), that will get results, short of court action.
- Lawyers – many firms of solicitors offer credit control services, only use it if you done all of the above.
- Factoring – is a service where you get a percentage of your invoice days after raising it and the factoring firm chases for payment, but is costs. Make sure you compare payment terms, cost and customer exclusions.
- Court – take non-payers to the small claims court, you can do it yourself, it is not that difficult.
- Garnishee Order – if your customer is going bust, get a garnishee order from a court and get payed by your customers client. Only works if your goods and services have been sold on.
- Why Bother Debts – don’t waste your time with small amounts, it often takes longer to chase small debts and is annoying. Write it off, move on. If the “customer” comes back – sometimes they do – double the price and make them pay up front.
There is no excuse for not chasing your money, if you don’t want to do it yourself, get someone to do it for you, like a virtual assistant – remember whoever screams the loudest will get payed first.
UPDATE Aug 16th: 12. Invoice Discounting – sell individual invoices as and when needed. Great comment by David Banfied, see below.
For more of my checklists see the Small Business Checklists category and as always please add to my list with your comments, tell us what works for you.