Cash flow is a crucial element to the growth and stability of a business. It is important to ensure that you have access to such cash when you need it. Often, this cannot occur for some businesses because of existing debtors. Here are some tips to manage your debtors:
Ensure your invoices have the correct details, this includes making sure you know whom and where to send your invoices to. Be sure to confirm correct contact details with your clients and if it is a company or business, that the Australian Company Number (ACN) or Australian Business Number (ABN) is included as well as the correct contact names and addresses.
Send your invoices either on the same day you sell your product or provide your services or at an absolute minimum within the same week. If your payment terms are 14 days, this could mean the difference between clients paying someone else’s invoice before yours.
Have a payment process that is easy for your clients to use. Take advantage of technology systems that are available to ensure an efficient way in which payment of your invoices can be attended to and finalised.
If a client disputes your invoice, ask them to specify if it is certain parts or the entire invoice. If it is parts of the invoice ask them to pay the non-disputed amounts, that way you are receiving some form of cash flow whilst you negotiate on the disputed aspects of the invoice.
Be proactive about chasing your debtors and pick up the telephone. Do not be afraid to ask for payment and if a payment arrangement has been entered into make sure that you are monitoring it closely and contact your client immediately if the arrangement has not been kept.
Be prepared to take further action for non-payments. This could be referring your client onto senior management within your business or onto a solicitor who can assist with recovering the debt. The sooner you take such steps the easier it is to recover your money.
Ensure that a solicitor has reviewed your terms of trade and/or contracts so that they are legally compliant, as this will ensure there are no obstructions to the debt recovery process.
If you have any questions in relation to Debt Recovery or reviewing your terms please contact our team on (02) 9523 5535