Every one of us in business has at some point had to deal with a slow or poor payer. The issue here is that the only one suffering is the one that’s owed the money – you!

I want to begin by focusing on your debtors – the people that owe you money for products and services that you have delivered. As far as I’m concerned, this is an area that needs a massive focus, not just once, but all the time!

Let’s take a look at some key tips that will help you accelerate your cashflow by calling in your debtors.

• Modify your trading terms – the question here is why do you have the trading terms you do? Are they 30 days? Why aren’t they 7 days? Or 14 days? In most cases it’ll be possible to reduce your trading terms significantly to dramatically accelerate your cashflow. The worst example of what I would call “group think” was an industry and a market that considered it normal practice to allow debtors to pay on the 20th day after the end of the month! Think about that! Depending on when you issue the invoice, your client could have up to 51 days to pay! That’s almost as good as a credit card! Better still it’s interest free even after that date! My guess is you’re not a financial institution so stop offering lines of credit.
• Ask for a deposit at the beginning of the engagement or better still, ask for payment in advance – in most cases there is nothing stopping you except you in getting paid in advance of providing your products or services. If you’re confident in your products and services, why not?
• Appoint a debtors champion – this is a special person who is not afraid to pick up the phone and have the tough conversation. This is also someone that can be relied upon to follow up and follow through on a rigorous ‘follow up’ process.
• Implement a rigorous follow up process – all times below are added to the due date as a guide for the follow up timeline:

+3 days– polite email reminder
+5 days – follow up letter number 1
+9 days – phone call reminder
+10 days – more direct follow up letter number 2
+13 days – phone call
+14 days – final notice (in writing)

Keep in mind, that if you get through to the client and make arrangements, then follow up in the same fashion when those arrangements are not met. Make sure you condense the first contact to +1 day after the date agreed.

• Change the wording on your invoices – the worst thing you can do is use terms like ’30 days’ or ‘net 30 days’ because it is open to interpretation and you won’t follow it up anyway! Your invoice due date has to be a date! Use terms like ‘On or before <<date>>’ or simply use a ‘date’. It works for the power companies so why not you? After the date has passed, refer back to point 4 and get on with following it up!

I’ll continue with some more debtor strategies next week. In the meantime, review these and ask yourself what you can improve to speed up the cash that you have already provided your products and services for!