Yesterday, 4th September I received the invoice for the work done which, quite honestly I had forgotten all about!

Several points to make:

• The invoice was received by 2nd class post and was dated 1st September. OK - I know not everyone emails invoices (although if you can, do!) but at least post it 1st class
• Don’t get hung up on the ‘We always do our invoicing on the 1st of the month’. When the job is complete – send the invoice.
• When you send the invoice, unless we have already discussed them, give me some hint of your payment terms otherwise I will assume 30 days.
• Include on the invoice some idea of how you would like to be paid – bank account details are always useful.

The net result is I will now be sending a cheque on 1st October resulting in payment being received by my supplier two months after work was completed. If they had sent me the invoice immediately and told me payment was due on 7 days they would have been paid within the week!

Do you invoice promptly? If not - call me! 

Following on from an earlier blog I have now decided to launch a monthly newsletter with the first to be sent out late September/early October.

Please sign up by clicking on this link and entering the simple details (email address, name and business name)

The usual promises obviously apply – your details will not be sold, lent or given away to anyone else and will not be used by me to bombard your inbox!

My aim is that the monthly newsletter will attempt to make Credit Control interesting (no, really!) and as well as summarising some of the items on my blog will also include unique content, guest articles from related businesses, regular free prize draws and much, much more!

I am of course keen to have as wide an audience as possible for the newsletter – currently only my mother is signed up to receive it! – and therefore I am offering all subscribers the chance to win a fantastic prize. Everyone who registers by 30th September 2010 will go into a free draw to win a Thornton’s ‘I Love Chocolate’ Hamper – retail price £25!! (Family members are not eligible to enter the prize draw – sorry mum!). The winner will be announced by 7th October.

Please follow the link to sign up – you have nothing to lose and, who knows, you may win the prize!

Really?

Interestingly this still means that business invoices are being paid on average 21 days late with the Scottish living up to their stereotype and being the worst offenders! and those in the South East settling their bills the quickest.

Whilst clearly good news I would be very interested to hear your own experiences – are you seeing an improvement in your own business?

Oh, and if you still think 21 days late is unacceptable you know where to find me!

I am an active business networker and in particular enjoy, and gain great benefit from, 4Networking who also have a thriving forum. I regularly contribute to the forum but, until now, I had a somewhat tired/ordinary/plain/rubbish/boring (delete as appropriate) signature and this was pointed out to me in a very polite and subtle way by the wonderful Liz Fox of WeAreFunkyFresh.

In rapid time and at very low cost (not to mention with very little input from me) she designed an all new signature bar for me:

I love it! The version shown is not ‘clickable’ but check out the real thing over at 4Networking and the links to email me, follow me etc all work perfectly.

Being a cynical old soul I did wonder apart from looking ‘nice’ what sort of impact this would have for me, if any. With the signature being active for less than 24 hours the early results are in and I am delighted that, already, I have gained 3 new Twitter followers as a result and more importantly for me I have had 42 new visitors to my website (hello if you are reading this now!) all directed straight from the link in my signature – previously I would struggle to get that many in a month!

Absolutely tremendous for me. Huge thanks to Liz Fox – hugely recommended for any marketing needs – she doesn’t just do signatures!

It is stating the obvious – and let’s be frank, much that is said within these blogs will be common sense – but it is important to know your customer to do an adequate risk assessment, ensure your invoices are correctly issued and ultimately know who to take legal action against if it all goes horribly wrong!

Much of the information required can be obtained by using a fairly simple application form which should include your Terms and Conditions – needless to say if you need assistance preparing the application, contact me. Information obtained from a correctly designed application form will include:

What is their legal status? Sole Trader, Partnership, Limited Liabilty Partnership, Limited Company or PLC

Address details – this will include the private addresses of directors and partners as well as details of where invoices need to be sent

Does the company need to provide you with an official purchase order?

Contact details for the purchase ledger clerk. Who is responsible for paying the invoice?

What level of credit is required? Note – this is not the same as the level of credit you are prepared to offer

Bank account details and authority for Bank reference to be obtained if required

Website information

The application form should be signed and the wording will make it clear that the signatory is accepting your Terms and Conditions of trade and giving permission to undertake credit searches on individuals. Take note that it is not possible to obtain a credit reference on an individual (e.g. business owner, director) without their signed permission – where possible therefore all directors and owners of the business should sign the application

When this is obtained and completed to your satisfaction you can move on to the credit assessment (the subject of the next blog) – never allow yourself to be pushed into making a decision before all the required information is to hand. If a prospective customer needs an answer now, then the answer is NO!

Tip Number 1 – DON’T OFFER CREDIT. 

OK – surprising perhaps for me to recommend this but there is very often a view – particularly from newer businesses – that they must offer credit to their customers. This is not the case and you need to consider the industry you are in.

If you are a plumber’s merchant supplying only to the trade then to compete you will have to offer credit terms.

If you are selling items to consumers over the internet then the norm is cash up front.

If you design web sites then staged payments should be the norm – e.g. 25% payable after the initial brief has been agreed, 25% on completion and further payments in between whilst work is in progress, dependent on complexity.

Having said that there can be differences within an industry. I know, for example, of a copywriter who always insist on payment up front and another who offers 30 days from date of invoice.

Before offering credit yourself therefore ask yourself:

• Can you afford to? Will cash flow allow?
• Can you afford not to? What do your competitors offer? Will you lose business if not offered?
• Can you offer a split payment? Part up front, part on credit?

Note that we are not discussing yet whether your customers are creditworthy (that will come!) but merely whether you need to/should offer credit yourself.

There is no simple answer but if you are supplying only to consumers (i.e. not businesses) there should never be a need to offer credit, if you are dealing with businesses then consider what is the norm within your industry (if you don’t know, ask me!) and what you need to offer to gain the business.

As a follow up to my previous blog post I see that Experian have now produced their report for November detailing payment patterns and once again their is a small improvement in the average time taken by businesses in the UK to settle their bills. The improvement month on month is minimal but the figures do show an improvement from 23.52 days beyond terms in November 2008 to 20.57 days in the same month 2009.

This does still mean that payments – on average – are being received 3 weeks beyond the due date.

You can, as someone once said, prove anything with statistics but these figures do once again show the importance of ensuring you do everything you can to be top of the list when payments are being made – i.e. credit control

More tips will follow as we move into 2010 (is that ‘twenty ten’ or ‘two thousand and ten’?) but in a nutshell ensure your invoices are raised correctly, first time, and that you speak with your customers before payment is due to make sure the invoice has been received safe and sound and they know how to pay and when it is due.

Best wishes for the New Year.

This would seem to be evidence of an improvement in business performance and confidence – on the basis that if you are reading this you are probably in business yourself I wonder if these statistics are borne out by your own experience?

It is interesting that the South West are the ‘best’ payers (my own region, although I would not claim full credit for this!) and the North West the slowest.

I do however find it surprising that these figures are considered encouraging – note that the 21 days refers to days late, not days from date of invoice. On the basis that this is an average it follows that there are many businesses paying considerably later than this.

The largest businesses (>500 employees) who it could be expected are best placed to pay on time are the worst culprits for late payment although surprisingly the smallest (1-2 employees) are not the best payers.

All this goes to demonstrate the importance of making every effort to ensure your invoice is on the top of the pile when it comes to payment. Payment will not just happen – the day an invoice is overdue is the day to be on the telephone to your customers chasing.

There is nothing I like more than chasing people for money but always ‘prevention is better than cure.’ In my experience too few businesses credit check their customers before supplying them but I wonder how many credit check their suppliers before paying money up front? What is the difference?

In this case a quick credit check on the company would have started alarm bells ringing as there were a couple of CCJs outstanding. However, even if you are not set up to do credit checks there are other tools available at your finger tips.

A quick search on Google (other search engines are available!) using the words Company Name and Complaint brought up three links on page one with the UK box ticked. Item 1 was the Company’s own complaint’s procedure, the other two were detailing complaints made by other businesses where the Company had failed to deliver in exactly the same way as for my client. This check alone which took seconds would have been sufficient for at the very least further questions to be asked and enquiries made.

I would be the first to acknowledge that there is a lot of ‘rubbish’ on the internet and it is easy for a disgruntled customer/staff member etc to post adverse comments on forums etc.

However, the art of making good credit decisions is making use of all the information available to you and why then would you not take what Google tells you into account when commiting your money?

To be frank this does not come as a surprise (unfortunately, getting very cynical in my old age!) and I am sure we can enter into lengthy debate as to how dreadful this is and what action should be taken by ‘the powers that be’ to stop the other 90% getting away with ‘theft’

But….

How many of these CCJs could have been avoided in the first place had proper credit checking and common sense been used by business people before committing goods/services on credit?

Think about it……