Dealing with Debt | Part One: Your Payment Procedures
As a business owner, you trust your clients and customers to pay their invoices – it is a simple transaction and everyone knows the rules. Right? Well, not always. Many business owners have come unstuck because their customer thinks the rules don’t apply to them or they would like to push the boundaries and see what they can get away with. This can leave you out of pocket and wishing things had happened differently.
Here at DSL, we see this scenario over and over – which is why we wanted to write a series of blogs designeed to help business owners. It isn’t nice for anyone and for the business owner it can result in a loss of trust and a sour taste in the mouth. But it doesn’t mean that all invoicing issues will necessarily lead to us knocking at the door. Surprisingly, we would rather it didn’t and so we recommend that you get your house in order to avoid any future debt payment problems.
Introduce clear guidelines
One of your first jobs as a business owner should be to set in place a set of clear guidelines for the issue and recovery of invoices. All customers and staff should be made aware of the process of issuing and chasing invoices and this should be adhered to consistently – without fail. Don’t give second, third or fourth chances to customers – they’ll come to expect it and could end up taking advantage.
Writing your guidelines
When thinking about these rules, think carefully about your particular business. If you run a veterinary practice, for instance, you will have a number of different income streams – those who are regular customers, those who are emergencies and those who are ‘commercial’. As each type of customer arrives with entirely different sets of circumstances, each of these may be dealt with differently.
An example of your guidelines could be:
• Emergency customers must pay in advance of treatment
• Regular on-going treatment may be completed under payment/credit terms
• All credit customers must undergo credit checks first
• All invoices must be paid within one month
• One reminder will be sent before further action is sought
Use a good T&C specialist
You should set up your terms and conditions with a specialist to ensure that they meet all the correct legal requirements. We are lucky to work with a firm throughout the Midlands who we recommend to our clients to ensure that your procedures are watertight – preventing any confusion or issues in the future. Contact us for further details [LINK].
Make everyone accountable
Charge one staff member with the job of looking after accounts and invoices. Having a clear person who can be the point of contact for all clients and customers is vital for giving your accounts department a “human face”. This makes it harder for there to be instances of any miscommunication or misunderstandings – as there is one person who has dealt with the entire procedure.
The ‘right’ person should be friendly and understanding, but also willing to be hard when called on to do so. If problems arise internally and you’ve followed your own procedures, there should be no issue with passing on debt to a collection agency – after all your customers know what is expected of them from the outset.
As you can see, the point we are trying to make is that everything should be laid out, clear for all to see and that it works for your business type. Hopefully this should mean fewer instances of unpaid bills.
Next month, for the next blog in this series, I will be addressing the importance of clear communication, which is designed to help you run your business even more effectively.
Should you want to find out more about correct procedures or, to find out more on how we can help you, please feel free to contact us here.
Director at Debt Solve UK Ltd T/A as DSL.