Now and again we all have a customer who, for reasons quite beyond our control, ‘forgets’ to pay. We’ve heard it all, haven’t we? “Please send another copy of the invoice; we seem to have lost it.” Or “We only pay on Statements. Please provide a Statement together with another copy of the invoice.” Or the best one:
“Your cheque is in the post.”
Unfortunately, this all costs time and money because someone has to keep applying the right kind of pressure to get paid. Fortunately, there are actions you can take – effective methods to communicate – that will help speed payments and protect your cash flow.
For some practical ideas on top-shelf methods to collect money due to you, we hope you’ll read the following, penned by our Credit Control partner Credit Hound.
(BUT BEFORE YOU DO…)
If you’re a Sage 200 or Sage 50 user know that DB Computer Solutions has partnered with Credit Hound, an automated Credit Control application specifically designed to help you save time and see improvements in cash flow. With this fully-automated credit control solution you will benefit from:
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Automated payment reminders sent to customers from before the due date right up until payment is made.
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Fully integrates with Sage 200 and Sage 50 Accounts for efficient use.
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Customised rules and actions automate many of your day-to-day credit control tasks.
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Answer customer credit queries quickly and track queries and disputes.
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Reduces credit control / collection expenses.
Find out more about Credit Hound now: info@dbcomp.ie or phone us 061 480 980.
Now please read on.
Late payments: Six ways to write effective chase letter
When you have unpaid invoices, it’s in your interests to contact the customer to find out why and get paid as soon as possible so your cash flow doesn’t suffer. According to the most recent data available from ISME (the Irish Small and Medium Enterprises Association), small- to mid-sized Irish companies wait an average of 56 days for payment of invoices due – a tardiness which starves businesses of cash and could lead to disaster. The question is, then: Why should you be the one left waiting – until you get paid it’s your money in someone else’s account.
You may decide to contact your customer by letter or email to chase the late payment, which is less time-consuming than contacting every customer by telephone. But when writing chasing letters, and while you need to be taken seriously, you need to correspond in a polite manner to maintain a positive customer relationship.
Here are six ways to ensure your chase letters help you to get paid faster.
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Chase via email. Chasing your customer via email is not only cheaper than sending a chasing payment letter in the post; it’s faster too, which will help you get your payment sooner. Providing you have the right contact email address it also means to go directly to the person it needs to go to.
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Scale your level of firmness. The further down the chase cycle you go, your late payment reminders need to become firmer in tone.
1st letter – short & friendly
2nd letter – more direct & less cordial than the first
3rd letter – demand payment by a certain date or legal action will be threatened
Final letter – demand payment and inform that legal proceedings will be started.
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Be specific.State the exact date you expect overdue payments to be made. That way if you find yourself in a court of law, there will be less ambiguity over the client’s failure to pay you on time.
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Be factual. Remind them of the last time you contacted them to chase payment, how many debtor days have passed and of course, how much they owe.
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Provide proof of evidence. You could even attach a copy of the overdue invoice and/ or statements to your email. There’s no excuse then for missing invoices.
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Give the benefit of the doubt.Ask if there a reason for the overdue payment. Check that there are no unresolved disputes such as damaged goods that may have delayed payment.
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Make it easy to pay. Take any hassle out of the process of making payments. Include your bank details, instructions on how to pay by credit/ debit card and contact details in case they have any issues.
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Have impact.Does your customer fully understand the implications of not paying on time? Remind them of their obligation to pay in accordance with current Legislation.
By taking these steps and making sure your efforts to chase payment are working to get you paid as quickly as possible, you’ll be helping to combat against the negative effects of late payments on your business.
Want to know more about making your credit controls procedures more effective? Credit Hound software from Draycir, provides a range of pre-written templates that have been designed with all of the above in mind, so you can start sending effective chase letters straight away. It is designed to be flexible to the needs of your business, so you can edit the letters sent by Credit Hound and adjust it to suit your business and meet your customer’s needs. For more information, visit
www.draycir.com/credithound or contact DB Computers to book a demonstration of Credit Hound: info@dbcomp.ie, 061 480 980.