Do your Debtors pay on time?
Get your clients paying on time.
It's easier than you would think & it's free.
Learn how to improve your cash flow and relieve some stress by collecting your debtors smarter. I have helped other business with this strategy and you can have this information free.
1. Invoices are to be sent within 3 days of the goods or services being dispatched or completed.
2. On your month end cut off, a reconciliation of all invoices to each client is to be prepared as a statement. This is to be posted to the client no later than the 3rd day of the following month.
3. On the 15th of the month a phone call to each client is to be made, this will be made to the previously identified contact for accounts payable, this is when you will start using scripts.
In most cases you will find that by implementing a consistent professional process that you follow each month, your clients will start settling their accounts on time. Remember it is not rude or confrontational; your clients will respect and most likely envy the fact that you have a system. You have provided the product or the service, you have confirmed that there are no outstanding issues and now you are simply asking to be paid. You deserve cash flow protection.
Make sure that when you open an account and they fill out your credit application form that they are advised of your trading terms and the systems you have in place in helping to insure that invoicing is correct, that it arrives on time and that your account-admin people follow up consistently.
If you find that you still have a percentage of accounts that wont pay on time, be honest and ask yourself why? You may not have the luxury to retire these accounts but you may also not have the luxury to bank roll them, or be in the position to handle any losses if they never pay. You may find that through communication at the very least you improve these accounts.
Remember it is not unreasonable to expect to be paid on time and if you have systems that are professional,
polite and consistent your chances of success will increase.
First Contact
“Hi this is Tony here from Madilach, how are you today? I have been asked to phone each client on the 15th of the month to confirm that they have received our statement reconciling the invoices for product that you purchased last month and to make sure that there are no queries pending” ……
(If there is a query)
Deal with it immediately and then ensure that you have now got the account to the point of being ready to be settled, some clients will just sit and wait. Be proactive.
(No queries)
“Great, so I can enter that you will be making payment into our account on the 20th of this month?”
Payment Confirmation
(If YES, for payment on the 20th)
“Great thank you. I look forward to speaking with you again soon.”
(If NO, for payment on the 20th)
“Could you please tell me why not? As I will need to make an entry in your client file. Can you please advise what date payment can be expected? Thank you I will confirm with my manager that this date will not affect any trading terms or incur any penalties to your account I will call back within 24 hours to confirm this for you.”
(If the promised date is reasonable, phone the next day as shown)
“Hi this is Tony here from Madilach, we spoke yesterday in regards to your account payment. I have spoken with my manager and he has decided not to impose any purchasing restrictions or apply any penalties provided that the account will be paid on the promised date of… I have entered this into your client file and I will phone you if, for some reason payment is not received on the ... before any changes are made to your account status. Once again thank you for your time and I look forward to speaking with you again in the future.
(If the date given is not reasonable or there is no date that can be given)
"Thank you for your time I will need to pass this information onto my manager, so that he can decide how this will affect your account status. Thanks again for helping me with this."
At this point it is best for the manager/owner to make the next contact. They will need to decide what your policy is going to be. If a date cannot be given, you have to seriously consider the value of this account. If a date can now be given by you involving yourself, then you will have to advise that you will be making contact again if it is not received and what action you will take if payment is not made.
Following up Missed Payments
Payments promised for the 20th of the month are to be phoned on the 25th. Other payment dates that were promised for example on the 30th of the month are to be followed up after 3 days of no payment.
“Hi this is Tony here from Madilach, how are you today? When we last spoke I made an entry on your account that the payment of your account for $ would be settled on the 20th (or the 30th depending on date given) we have not yet received it. I wanted to make sure you were made aware, in case there has been some error at the bank?”
If a new date is given that is reasonable.
“Thank you so much for your help, I will let my manager know that we can expect payment on the … I will let you know if for some reason we do not receive it on the. Thanks again for helping me with this.”
If an excuse is given but a new date for payment is not, or it is unreasonable, then follow up with:
“Thank you so much for letting me know what is happening, I now need to enter a new date in our system and then report back to my manager, what date can I tell him that we will receive payment? Thank you, I will confirm with my manager that this date will not affect any trading terms or incur any penalties to your account. I will call back within 24 hours to confirm this for you.”
However, if the date is more than 10 days longer, or the accounts payable person can not give you a date, then you need to advise them that you will enter this information into their account file and report back to your manager to get confirmation of what will happen now, then thank them for their time.
