MONEY
Chasing debtors
Take the fear out
of chasing debtors
Collecting what
is owed to you
doesn’t have to
be daunting, says
Steven Renwick,
CEO of Satago
I
f you give your business
customers trade credit, you
need to make sure you’re as
effective as possible at getting
paid. However, for many
people, ensuring you get paid on
time is one of the most daunting
aspects of running a business.
Satago’s own research
found that a third of SMEs
are reluctant to chase their
customers. Of these, 81% found
the process uncomfortable,
whilst 19% were afraid of
antagonising customers.
If payment
is not
forthcoming,
don’t be shy
to mention
that you’ve
the right
to charge
interest and
compensation
under the
Late Payment
Regulations
So how can you take the fear
out of debt collection? Firstly,
consider it an opportunity to
strengthen your relationship
with your customer. If they
see you are professional in
all aspects of your business
– from delivery to account
management – you become
more credible in their mind,
and hence more likely to be
towards the front of the queue
for payments.
Start by being disciplined
about invoicing - be on time
and be accurate. Believe it or
not, it’s actually quite annoying
for businesses to receive
invoices late. Your customers
need to plan their cashflow too,
and you’re doing them a favour
by invoicing them promptly.
Make sure the details on the
invoice are accurate, since
disputed invoice details are
one of the most common
reasons for late payment.
Contact your customer a
few days after sending them
the invoice to confirm it has
been received and there
are no queries. This is
your opportunity to
get to know whoever
is responsible for
making payments.
Be friendly and
courteous, and you’ll
start to build a personal
relationship. If they get
to know you, then they are
psychologically invested in
you, and more likely
to pay promptly.
Contact your customer a
few days before payment
is due, to remind
them and to
double-check there are no
issues. Again, don’t feel you
are annoying them – this is
business. You might feel more
comfortable emailing them for
these confirmations rather
than phoning.
If payment is not
forthcoming, don’t be shy
to mention that you’ve the
right to charge interest and
compensation under the Late
Payment regulations. If you use
a service such as Satago, you
will see the exact compensation
and interest that you could
charge. You don’t need to
charge the fees, but it gives
extra leverage if your customer
knows that interest is accruing.
If the thought of contacting
your customer is too much
for you to bear, or you have
such a high number of outgoing invoices that it would
be a burden to chase every
single debt, then consider
outsourcing.
You can use an online
system, such as Satago, that will
automatically contact all your
customers with customised,
escalating emails and letter
reminders, or you can use a
credit management agency
that will do this process
manually. Experienced credit
managers have no qualms
about contacting troublesome
customers, and they know
the balance between being
courteous, but firm. Most
importantly they’ll know when
to advise that it’s unlikely a
certain invoice will be paid.
Contact:
www.satago.co.uk
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