How can you work with your customers in order to prevent late payment? Three of the big considerations to bear in mind are knowing whether to give credit to a customer, how much to give, and the likelihood that the customer will default. Armed with the right knowledge and the right invoicing procedure, you can be sure to protect your business from late payment. Read on for a few top tips to help!
1) Get organised
You need to view all your accounts as a whole to know where your credit risks and opportunities lie. Get all your details sorted in order to know which customers you can grant extensions to, which need reining in, and if you’re opting for an invoice finance plan, which invoices are best for factoring.
2) Audit your accounts regularly
Review customer payment behaviour regularly. Keeping in the loop about how they’re doing with their payments will make sure you’re making decisions on the most up to date information. Situations can change for everyone, so make sure you know you’re using the right credit terms by frequent review.
3) Offer better credit terms than your competitors
A business customer will always need credit, so it’s essential that you strike the balance between offering better terms than your competitors and limiting your risk exposure. Up to date payment information can really help with this.
4) Invoice finance can help
If you’re still hit with late payment problems, don’t just suffer through them. Alternative finance options such as factoring and invoice discounting can boost your cash flow by unlocking the funds tied up in unpaid customer invoices. These are fast, flexible and accessible ways of combatting late payment; you can release up to 90% of an invoice’s value within 24 hours.