Tip No.1 : Don’t offer credit!
Many business owners assume they have to offer their customers a credit line, especially when they first start up. That’s not the case at all, and there are many ways you can arrange to receive at least some of the payment in advance, reducing the risk of customers turning into bad debtors further down the line. More info here

Tip No.2: Know your customer
Make sure you have all the relevant information on new customers. Using an application form – which includes acceptance of your T&Cs – is a good way to collect all the data you need. More info here

Tip No.3: Credit check your customers
Thinking about offering credit? Even if you think you know someone really well you should do a background check to make sure there are no financial skeletons lurking in their closet! More info here

Tip No.4: Make terms and conditions clear upfront
Before you begin work, making sure your client has accepted your T&Cs, payment terms and detailed specification of the product or service to be delivered can save a lot of hassle later on. More info here

Tip No.5: Invoice accurately, clearly and on time
For an invoice to be legal it needs to have certain details on it – make sure yours are accurate and include all relevant information. And don’t forget – the sooner you invoice, the sooner you get paid! More info here

Tip No.6: Be proactive in chasing outstanding payments
If you notice someone is late paying don’t delay – take action straight away. A simple phone call can often nudge a late payer into touch. More info here

Tip No.7: If payments are late – chase, chase, chase!
If you’ve delivered the service and the client is happy with it they owe you money – there’s no two ways about it. Don’t be afraid to pick up the phone and make a (polite) nuisance of yourself until payment is received. More info here

Tip No.8: Don’t be afraid to place an account on hold
If a client is having problems paying you, don’t let them build up any more credit. Stop supplying the service – you’ll be amazed how quickly people will pay you if they value you. More info here

Tip No.9: Take problem payers to court
If you’ve tried all the above and payment is still not forthcoming, take out court action. This is more straightforward than it sounds and you can usually make the client pay your costs too. More info here

Tip No.10: Thank reliable payers – but keep an eye on them!
Never forget your reliable clients, the ones who pay straight away – for they are the lifeblood of your company. But do keep an eye on them, and take action straight away if payments start to slip. More info here

For more information and advice on managing your credit control get in touch – you can call us on 01225 667474 or email us too.

We’ve looked at the background work you should do with every new client and we’ve outlined how to construct your paperwork to avoid disputes as far as possible. We’ve given you some tips on how to put a credit control system in place so you can chase late payments straight away, and we’ve also covered what to do when it all goes wrong – including stopping accounts and taking legal action.

But what about all those clients who pay up straight away and never give you any problems? Have you ever thought about thanking them?

It’s sometimes easy to forget that the majority of your clients are reliable but they are the people who are keeping your cashflow under control. It’s also easy to become complacent and rely on those people too much …

Next time a client pays their invoice on time, why not drop them a line to acknowledge receipt and thank them for their continued support? We all love to be thanked and if your clients feel you value them they are more likely to continue paying promptly.

However, you also need to be aware that things can change quickly – so don’t be afraid to take action if previously reliable clients’ payments begin to slip. Normally a friendly phone call will jog their memory or give them the opportunity to explain any issues they’re having.

Have a look back through our credit control tips for more advice on how to manage your invoicing painlessly, and if you need any more information give us a call on 01225 667474 or email us today – we’re happy to help!

Sometimes the only way to get money you are owed from a problem client is to take them to court. Don’t be afraid to go legal because after all, you provided the products/services and you are entitled to be paid for the work you did.

The first step when taking legal action over an outstanding invoice is to issue a 7/14 day letter (also known as a “letter of claim” or “letter before action”). Note that you MUST issue a 7/14 day letter BEFORE you start any legal action, otherwise a court could find in your client’s favour and actually issue damages against you! In this letter you need to give details of the outstanding invoice(s), including the invoice number and amount, and issue a warning that you will start legal action if full payment is not received within 7/14 days.

Often this letter will scare your client into making payment, because they will be keen to avoid legal action. However, if payment is still not forthcoming you can then start legal proceedings.

The easiest way to start legal action is via Money Claim Online (MCOL) which is an internet-based claims service run by HM Courts & Tribunals. Making a claim is straightforward: you work your way through the online claims process and there is help and advice available throughout. There is a cost involved in starting legal action but you can usually include that in the amount you recover from the problem client – and don’t forget to include late payment fees at base rate plus 8% for every day the invoice is overdue plus late payment fees. Also you can make a legal claim for payment of any invoices past their due date, so if the client has several outstanding invoices you can claim in one go, even for invoices that are only a few days late.

Alternatively, you might prefer to use an outside agency to take legal action on your behalf. There are lots of companies around who will do this, but some are less scrupulous than others. The best ones work on a no win, no fee basis so do not pay any money up front – instead you will pay a percentage of the amount recovered plus your court costs, if these are not paid by the defendant. Needless to say – we can help!

Our advice would be to stop right there. Do not be afraid to place their account on hold – and do it promptly.

The trouble is, we often get emotionally involved with our clients. Without realising it, the once professional relationship becomes more personal and once we consider our clients to be our friends too it’s difficult to stay in control when things go wrong. We make allowances for their late payments, tell ourselves they can’t cope without our services and products and continue supplying them while the debts get bigger and bigger. After all, we know they’ll pay up in the end … don’t we?

The truth is, once a client gets into a bad debt cycle it’s very hard to get out of it. The more invoices they have outstanding, the harder it is to clear the amount due and the more your cash flow is affected. Eventually you’ll find yourself handing the account over to a debt collector, taking the client to court – which could damage the relationship irreparably – or writing the amount off.

The solution is simple. Just stop supplying the services as soon as late payment becomes a problem rather than an irritation. If the client values you enough and needs what you provide they’ll soon clear the bill so normal service can resume. And if they don’t, then you’ll know either they didn’t need you that much in the first place – and you can take them to court guilt-free – or they are in serious financial straits, which you’re better off not getting involved in.

But what if a previous bad payer comes back to you in the future? Should you turn them away, or give them a second chance? We’d suggest you give them a chance – but put as many safety nets in place as you can. Do a full credit check, and if at all possible insist on full payment in advance. Alternatively, take a large deposit and then further payments in stages throughout the term of the product or service – with the final stage not handed over till payment has cleared. That way the client gets what they want and you get peace of mind and money in the bank.

For more help with managing your credit control give us a call on 01225 667474 or email us today.

We already touched on it in the last post – you need to chase, chase, chase payment until it’s received. You should never be afraid to ask for money due to you – after all, you supplied the product or service, the client is happy with it and they need to pay you – it’s as simple as that!

When chasing payment use the phone wherever possible, rather than sending an email or letter. It’s fine to follow up your calls with confirmation in writing, but it’s much more difficult for someone to fob you off with an excuse over the phone than to ignore your letter or send back a “yeah, yeah, we’ll pay” type email.

Ask to speak to the person who deals with accounts, outline the details of the invoice and the due date, and ask them to confirm when they will be making the payment. Encourage them to pay via BACS rather than sending a cheque and make a note of the date they have said payment will be with you. If it’s not received, call them on that date to find out why, and stress how important it is that the invoice is paid to avoid further action being taken.

Sometimes people will throw random queries at you as a stalling tactic. While this is annoying, deal with each query quickly and courteously, no matter how spurious it may seem. Some people are just looking for an excuse not to pay, so by maintaining a professional level of customer service at all times you’ll remove any opportunities for payment to be avoided.

Finally, if a client is still refusing to pay despite you chasing the invoice several times, it may be time to call in the experts. We can manage your entire credit control process or work with just your problem clients, on a disclosed or non-disclosed basis, to ensure you receive the payment you deserve. Call us on 01225 667474 or email us today for more information.

The first thing you must do is ensure that you issue invoices properly. Read back over Credit Control Tip Number 5: How to invoice your clients accurately, clearly and on time to make sure you include all the right information. Accurate invoicing makes it much more difficult for a client to start a dispute.

If the invoice is for a large amount or you already have concerns about the customer, call them 7-10 days before payment is due to check the invoice has been logged on their system, there are no problems with it and they have your payment details.

Encourage your customers to pay you via direct debit or a bank transfer. This means you should receive payment very quickly. It’s all too easy for a client to say they’ll put a cheque in the post – which never arrives!

As soon as an invoice becomes overdue call the customer and ask them when payment will be made. Often you’ll find the invoice has just been overlooked. Be firm about when you expect to see payment and outline the action you’ll take if it doesn’t happen. If the client seems to be stalling ask them if there is a problem – this will help you find out if the client is in financial  difficulty or unhappy with your work, and you can take steps to resolve issues straight away.

If payment is not forthcoming write to say you will be exercising your legal right to add late payment fees and interest (base rate plus 8%) and you will be taking further legal action if necessary. This can often trigger a panic payment!

If the client is a regular customer don’t let multiple invoices mount up – stop supplying them with the products/services until the debt is cleared. If they value your services they will have no option but to pay up.

Finally, if you still haven’t received payment consider handing the invoice over to a debt collection agency. Many work on a no win, no fee basis where you pay them a percentage of any money they recover.

Better still, why not outsource your entire credit control process to someone like us? We can issue invoices and collect payments on your behalf. When you work closely with your clients it can be quite emotionally stressful dealing with bad debtors – so using a third party to manage that part of your business can make it much more efficient and less painful! Give us a call on 01225 667474 or email us for more information.

Agree your payment terms in advance.

We’ve already talked about how it’s best to avoid offering credit if at all possible, (Top Tip Number 1 – don’t offer credit!) but if it’s unavoidable you’ll save yourself a lot of trouble if you get your payment terms, including any late penalty fees, agreed before you begin working with the client. Have a look at tip 4 – Make terms and conditions clear up front – for more information.

Include all the required information in the invoice.

If your invoice is inaccurate or incomplete you give your customer a good excuse to delay payment. Make sure every invoice you send includes the following:

-      The word INVOICE, the date the invoice was issued and a unique reference number

-      Your details – company name, address, phone number and email address, VAT number if applicable

-      The customer’s company name and address

-      A detailed description of the goods/services provided – “goods as supplied” is not sufficient!

-      The cost of the goods/services, the VAT due (if applicable) and the total amount payable

-      Payment terms as agreed, e.g. 14 days from date of invoice.

-      Your bank details, so payment can be made

-      A purchase order number if one was supplied

Invoice as soon as you complete the work.

When working on one-off projects send your invoice as soon as the project has been completed and accepted. While it may make sense to request payment for recurrent projects at the end of the month, having other payments come in throughout the month helps keep the cash flowing, so don’t leave all your invoicing till the 31^st.

Send invoices by email.

Wherever possible, send your invoices by email. Not only do you save on postage but you know the invoice will be received within seconds of you sending it. You can also send a read-receipt request to show you when the invoice has been opened – but be aware it’s not compulsory for people to accept these. Make sure you send invoices as PDFs, not as Word documents – this reduces the chance that someone will alter the figures in their favour. If you need to send invoices by post, send them first class – the sooner the invoice arrives, the sooner you’ll be paid!

Track your invoices.

In an ideal world you’d send the invoice and payment would appear in your bank account 7/14/28 days later, with no further action needed. Unfortunately this isn’t an ideal world! Have a process in place so you can track invoices and spot late payments straight away. Call the client and remind them that the invoice is due; it’s probably just slipped their mind but it could be they have an issue either with money or the work you completed, and a conversation can help sort things out. Make a note of the new agreed payment date and monitor it – and be prepared to call again if payment doesn’t arrive.

If you’d like any help with invoicing and credit control give us a call. We can manage the entire process from issuing invoices on your behalf to chasing and securing payments. We can also manage problem clients for you, or follow up individual invoices. For more information call us on 01225 667474 or email us.

Having clear terms and conditions is also a sign of good customer service because both the supplier and customer are protected if things go wrong.  It’s a good opportunity for you to lay out all the details of the service to be provided so the customer knows exactly what to expect.

You should always take advice when writing your terms and conditions. It is a legal document and if it’s not put together correctly you could find yourself unable to claim payment for services delivered. When writing your terms and conditions make sure you include the following:

Full description of the product/service to be delivered
Lay out all the specifications, including any special requirements, ongoing commitments etc.

Timescale for delivery, including any circumstances that might lead to delays
Include any deadlines that the customer needs to meet, and how timescales will be affected if they are late.

The final price and payment terms
Do you require payment in advance, in stages or on invoice? If you’re offering credit, how long after the invoice date is payment due?

Late payment fees
Under the Late Payment of Commercial Debts (Interest) Act 1998 you are legally able to claim compensation for late payments at base rate plus 8%. Be upfront about this and include it in your terms and conditions so your customers know what to expect if they are late payers. Also make it clear if late fees start after services are delivered or invoice date.

Liability
What happens if things go wrong? What are you, as the supplier, responsible for, and what is out of your hands? How much compensation can the customer claim and under what circumstances?

Finally, make sure you get agreement of your terms and conditions BEFORE you start working for a new client. Lots of businesses put them on the back of their invoice but this is too late – the work has often already been completed, and the T&Cs are then irrelevant!

For advice and help with drafting your terms and conditions give us a call on 01225 667474 or email us.

STOP!

Before you even consider offering a credit line you should always do a credit check on new customers. No matter how well you think you know someone, there’s always the chance that a nasty surprise might creep up and bite you – like they are on their 3^rd, 4^th or 5^th company with the others being wound up, they’re historically late payers  or they have a list of CCJs as long as your arm.

When you take on a new customer you need to be able to trust that they will pay your invoices promptly, because late payments can have a devastating impact on your own cashflow. It’s simple and straightforward to order a credit check on any company and it will give you lots of information about your prospective customer, such as:

Their financial history

Legal action taken against them, including County Court Judgements, winding up orders, insolvency

The overall stability of the company

Other companies owned by the directors

The company’s credit rating and recommended credit limit

A credit check gives you a detailed picture of a company’s financial standing and ability to pay, and with this information you will be in a better position to decide whether or not to offer credit. For example, a company that has a good credit rating generally but is slow to make payments may need a close eye keeping on them, and if you discover the company is newly incorporated company or has a trail of CCJs behind it you would be better off asking for payment in advance.

It’s also vital to regularly monitor the credit records of any existing clients too. Things can change very quickly and a director whose company is struggling is not likely to make that knowledge public – but if you credit check them now and then you’ll get some prior warning of their financial situation and can make decisions about future transactions. We can do this for you.

At GRD Credit Control Services we can access credit information on over 4.4 million UK businesses, both limited and unincorporated. Simply give us the trading name and address you need information on and we will provide you with a full credit report within hours. For more information and a quote contact us today.

P.S.!

This Blog is the 3rd in a series of ‘Top Tips’. I confess however that it has been a little longer than anticipated in production – I published Tips 1 and 2 in the first half of 2010!! No excuses – I will do better. Check back here weekly to see the next instalments.

In the meantime the first two Tips of this series can be found:

Tip Number One – Don’t offer credit

Tip Number Two – Know your customer

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!