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:
Ensuring your invoices have the correct details is extremely important. By this, we mean that it contains the correct contact details for your customers. This can include:
- A contact name;
- The correct address for the customer;
- If works is being performed at a property or site, it doesn’t hurt to include this as well; and
- If your customer is a company or business, include the Australian Company Number (ACN) or Australian Business Number (ABN).
You want to be on the front foot with issuing your tax invoices. If you can send this to your customer 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 customer 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-payment. This could be referring your customer 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 contracts so that they are legally compliant, as this will eliminate obstructions to the debt recovery process.
If you have any questions in relation to how to manage your debtors or reviewing your terms please contact one of our experienced team members at Southern Waters Legal on 9523 5535.