Collecting overdue invoices in a fragile economy

This year the UK economy in 2012 has seen a flatline of trading conditions and, despite all the optimism of some banks beginning to open up their wallets to lend to small businesses again, it is crucial that you are more pro-active than ever before about collecting overdue invoices.

Being pro-active with your debtors is the number 1 route to ensuring your bills are paid as quickly as possible, once you are actively on top of your debts, and your debtors know this, you will be the one to be paid first every time.

I have put together a brief list of my best practical tips for collecting overdue invoices from my years dealing with SMEs and I hope you find these useful to your in-house debt collection:

1) Be Pro-active – Plan your debt collection steps on the day you invoice your client. Diarise calls after 14 days – to make sure your customer has received a copy okay. 21 days – to make sure your customer has no disputes. 28 days – to request a payment date for the coming month. These are all pro-active steps which you can take BEFORE your invoices become overdue, ensuring no excuses can be used for payment much beyond your 30 day terms.

2) Be flexible – remember collecting overdue invoices in today’s economy can be difficult when there is no money to collect. In other words, work with your customer to ensure payment over a period of time if they cannot pay in full. Many debtors do not pay because they believe they have to pay in full in one go. Spread payments over 3-4 weeks, or more, to help their cashflow and you will reap the benefits when trading conditions improve and the grass is greener the other side of the downward turn of cashflow your customer is experiencing.

3) Be confident – if you don’t ask you don’t get. Many businesses will happily take on new customers, perform a satisfactory service, send out an Invoice and presume payment bang on 30 days. The business world doesn’t always work out that simplified. Ask confidently for payment in 30 days’ time in your email to your customer when you send the invoice. Ask confidently when you call your customer to chase payment that you want to be paid in 7 days’ time. State confidently, if they continue to delay payment that you will be handing the account over to a 3rd party collection agency and Interest and Late Payment Compensation will be added to the balance. You have done the work; do not be afraid to ask for what you are owed.

It is always important to remember when collecting overdue invoices that a change in personality is required sometimes to effectively collect the money you are owed. If you take the above tips into your next debtor situation you won’t be far from increasing your cashflow and growing your business in 2012, despite the economies downturn.

If you need any help collecting overdue invoices, or would like some free advice regarding a particular debtor, please don’t hesitate to drop us a line 01332 565 350 or email enquiries@tauruscollections.com to discuss your options for recovery.