Give yourself the best chance of being paid by customers
Even when your business is thriving, it can take just a few unpaid invoices to create cash flow issues. That’s why we want to give you the best chance of being paid by your customers.
There are many businesses with customers who - for one reason or another – don’t pay their invoices on time. But, there are some preventative measures you can take. By integrating bad debt prevention into your customer journey, you’ll give your business the best chance of success.
The earlier you take action, the more likely you are to preventing funding gaps or ultimately, writing off bad debt. So, let’s talk about the things you can do to reduce the likelihood of your overdue invoices turning into bad debts.
Before you agree to work with any new customers make sure you:
- Try to take on a good spread of customers across a variety of sectors and industries. By diversifying your customer base, you’ll stand a much better chance of reducing your exposure to bad debt.
- Stick to your basic requirements and avoid taking on anyone who fails to meet these. Whenever you’re given little contact information, potential customers are hard to reach or they fail to sign a contract, it could be a sign that they’ll be more hesitant to pay.
- Have clear payment terms that you consistently stick to, let your customers know about any late payment charges to save disputes later.
- Get to know potential customers first and run credit checks before offering credit terms and credit limits. A simple credit check online could save valuable time, and money, in the future.
- Determine the highest tendency for debt by looking at the write-offs you’ve had to make over the last three to five years, allowing you to identify what bad debtors look like and the root causes for high bad debt.
Once you've decided to work with a customer:
- Group them into new, current and arrears by value and credit risk. Vary your approach to them accordingly.
- Invoice customers accurately and on time, sending reminders where you need to. Use technology which ensures a record of your invoices and allows easy financial reviews.
- Keep track of customers payments - be clear you know what’s owed to you.
- Use your customer payment data to understand and predict payment patterns and update your customers risk profiles based on this.
- Have a systematic approach to credit control across the customer journey to ensure payments are received on time.
Find out more how invoice finance can improve your cash flow and help protect your business against customers who don't pay invoices on time.