Dealing with Problem Debtors
Poor debtor management can have a huge impact on your business. If your cash flow is being controlled by your debtors then you need to take back that control.
If you are having problems with your debtors here are some strategies that may help to get them to pay their accounts.
- Do not delay in sending out the invoice. Send it immediately after the work has been completed and once the payment is late, follow up immediately.
- Depending on the type and size of the job consider asking for a deposit. This can be important especially if you have a lot of costs you incurred at the start of the job.
- For contracts that may take a considerable period of time establish progress payments throughout the work.
- When you submit your invoice always include any relevant documentation such as quotes, delivery dockets or any other information. Questions arising from the work can cause delays in the payment.
- Consider offering a discount if accounts are paid in advance but ensure any discount you offer is relevant to your profit margin. For example, if you are making 10% profit on the job, don’t offer a 5% discount as this represent 50% of your profit.
- If your customer is genuinely having problems paying the account offer a payment plan where they may pay off the debt over an agreed time.
- Get on the phone and discuss the outstanding payment with the customer. Often a brief and direct discussion can resolve the issue a lot faster than taking any other action.
These are just some methods that may help you to deal with problem debtors. If the customer is still not paying then that is when you should consider using a debt collector or taking legal action. It is not something anyone wants to do but you deserve to be paid for your work.