Every business owner wishes to earn profit and invest it back in their business. But the real world and the economy we live in today, don’t allow a business owner to do this. A business needs constant cash flow to run their business smoothly. But the economy is such that their clients sometimes don't pay the outstanding bills on time or they have multiple bad debts accounts.
To avoid such situations, you need a better system for credit control so that there is a continuous cash flow in their business. Hiring a debt collector is your last resort. But to ensure you don’t reach that point, here are simple ways of doing credit control.
Make sure your payment terms are crystal clear
No matter the size of your business, you should have a clear set of terms and conditions when it comes to payments and invoices. Whether you are giving a loan to people or businesses or rendering services on credit, make sure you tell the person your payment terms and conditions.
It is a good habit to include these terms on your credit forms or invoices or contracts that you make with the party. It will give you some leverage in case the debtor doesn’t pay or if there is a clash between you two. Also, having a clear set of terms and conditions in your contract tells remind the debtor about paying on a certain date and the consequences they will face if that doesn’t happen.
Send timely invoices
As a general rule of thumb, you should send your invoices right after you deliver the services or products. Don’t wait till the end of the month or the start of another to send invoices for all deliveries made in a month. It delays the payment, and it can cause a severe cash crunch in your business. If you don’t want to deal with late-paying customers and want a smooth cash flow for your business, send invoices on time.
Reward a loyal customer or client
If a client is always punctual in their payments, make sure you return the favor. It is a great strategy to build a more deep and trusting relationship with your client. A customer or client who always pays on time should be rewarded. For instance, you can give them a discount or make the delivery free. It will enhance your relationship with them more.
Don’t hesitate to ask for payment
If a client or customer doesn’t pay the outstanding bills due to any reason, and the debt goes beyond sixty or ninety days, make sure you ask them to pay. Don’t be hesitant to ask for the payment, it is your right. If they continuously refuse you or elude your calls or letters, hire a debt collector or think about sending a court summons.
No matter how many precautions you take, it is inevitable to have some customers who will refuse to pay or go off the grid. In such a scenario, you can take help from a debt collection agency like Cedar financial. Read more reviews to know the effectiveness of a collection agency.
To avoid such situations, you need a better system for credit control so that there is a continuous cash flow in their business. Hiring a debt collector is your last resort. But to ensure you don’t reach that point, here are simple ways of doing credit control.
Make sure your payment terms are crystal clear
No matter the size of your business, you should have a clear set of terms and conditions when it comes to payments and invoices. Whether you are giving a loan to people or businesses or rendering services on credit, make sure you tell the person your payment terms and conditions.
It is a good habit to include these terms on your credit forms or invoices or contracts that you make with the party. It will give you some leverage in case the debtor doesn’t pay or if there is a clash between you two. Also, having a clear set of terms and conditions in your contract tells remind the debtor about paying on a certain date and the consequences they will face if that doesn’t happen.
Send timely invoices
As a general rule of thumb, you should send your invoices right after you deliver the services or products. Don’t wait till the end of the month or the start of another to send invoices for all deliveries made in a month. It delays the payment, and it can cause a severe cash crunch in your business. If you don’t want to deal with late-paying customers and want a smooth cash flow for your business, send invoices on time.
Reward a loyal customer or client
If a client is always punctual in their payments, make sure you return the favor. It is a great strategy to build a more deep and trusting relationship with your client. A customer or client who always pays on time should be rewarded. For instance, you can give them a discount or make the delivery free. It will enhance your relationship with them more.
Don’t hesitate to ask for payment
If a client or customer doesn’t pay the outstanding bills due to any reason, and the debt goes beyond sixty or ninety days, make sure you ask them to pay. Don’t be hesitant to ask for the payment, it is your right. If they continuously refuse you or elude your calls or letters, hire a debt collector or think about sending a court summons.
No matter how many precautions you take, it is inevitable to have some customers who will refuse to pay or go off the grid. In such a scenario, you can take help from a debt collection agency like Cedar financial. Read more reviews to know the effectiveness of a collection agency.
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