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It is more important than ever for businesses to keep a close eye on money coming in.
Having a steady cash flow is vital with the full effect of the Brexit vote yet to be felt.
With this in mind, companies should need solid procedures to make sure they maintain a steady income.
A firm may have the best revenue figures in its sector but it counts for nothing if those sales are not transferred into cash.
Making sure clients pay their dues – so called credit control policies – start the moment an item is sold or an invoice is raised.
One way of making sure this happens is to include a range of items in contracts or terms and conditions. These can include:
– Strict payment terms
– Details about clients including phone numbers, addresses and emails, to make it easy to find information when chasing outstanding invoices
– Interest payments for late invoices
– The ability to recover legal costs.
Another key thing is to make sure sales people are fully briefed about how to get money from each client.
When invoices still have not been paid – even after taking the above measures – then companies should think about implementing strict procedures. These can include:
1. Sending an email or text reminder a few days before the invoice is due for payment
2. The day after payment is due, send a further email or text to state the invoice is due and interest will now accrue
3. Four to five days after a reminder is sent, phone the customer to see if they are having any difficulty with payment
4. Seven days thereafter, send a formal letter attaching a copy of the invoice
5. Four to five days after that, attempt a second phone call to the debtor
6. Seven days thereafter, send a formal letter of demand
7. After a further seven days, any outstanding accounts should be referred to a debt recovery team for collection.
Credit control measures should be drafted to fit with your business. Of course, there may be some trusted clients where the procedures should not be used.
By following these simple steps, businesses should increase their cashflow. It may also imply a firm is professional and lead to repeat customers.
Maidstone law firm Brachers can assist with formal debt recovery procedures through the court process and can also assist with credit control.
It can draft a policy or even undertake credit control on a company’s behalf. Find out more at the firm’s next seminar Future-Proof Your Business – Effective Credit Control at Bridgewood Manor Hotel in Chatham on Thursday, November 17
Click here to register or contact legal executive Paul Abdey on 01622 767470.
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