Maintaining cashflow is key to keeping your business going. Your suppliers are expecting you to pay them on time so you, in turn, must ensure that you get paid by your customers.
Here are some tips from Canada Business Network that may help you:
Invoice Immediately - otherwise you end up carrying your customer's debt
Organize your Collection System - have a system! Stay on top of it or designate someone to do it for you. Documenting interactions and following your system will prove beneficial if you have to take legal action for non-payment. Final notices may even be sent out by certified mail.
Script It - have a script that you use for every interaction with non-paying customers. Have pre-drafted letters for past due accounts. This will allow you to be direct and consistent with your customers.
Reward Early Payment - you may wish to give a small discount (2% or so) to customers who pay their invoice within 10 days or perhaps you will wish to implement late fees for those who miss the due date. Be sure to be clear on the invoice so you customer knows what the rewards/penalties are.
Partial Payments - you may want to collect 1/2 up front and the remainder on delivery. Your system should be designed to meet the needs of your business.
Know Your Customer - getting to know your customer's likes, dislikes, spending habits, credit history (check it periodically) will help you manage their account more effectively.
Take it Seriously - when several of your requests have turned up no response, it's time to take serious action. Don't hesitate; ramp up the pressure. You may wish to seek legal advice or use the services of a collection agency.
Controlling cashflow is one of the key pillars of business success.
It's smart to treat it accordingly.
