Thursday, September 22, 2011

Difficult Client? How To Get Paid On Time Every Time

There are few things more frustrating than chasing invoices.

Are you assertive at invoicing or a pathetic wimp who lets clients walk all over you?

More than ever, you want to pocket every promised dollar smartly.

After all, some 10,000 small businesses are expected to fold this year as consumers stop spending amid growing fears of widespread job losses, according to credit reporting agency Dun & Bradstreet.

Find out how to coax tricky clients to pay you. Avoid getting strung out or stiffed.

Beat the deadbeat: 10 secrets of making customers pay

1. Upfront

Charge in advance if you can, says business mentor Jen Dalitz. Her clients buy packages of mentoring hours in advance on a basis of the more the cheaper the hourly rate. So she never ends up chasing invoices, she says.

"It's surprising how many clients have been able to do the same in their own business," she adds. "It just takes thinking and planning."

2. Rapid response

In business, says consultant Veechi Curtis [www.veechicurtis.com.au], author of Small Business for Dummies, the squeaky wheel gets the grease. So, chase money as soon as an account falls behind, Curtis says.

Phone your client the second an invoice falls overdue, and politely ask when the client anticipates paying. If the client claims to be "tight for funds", always seek a commitment to a particular payment date.

3. Maximum choice

Offer as many different payment options as possible, Curtis says. "The more the merrier."

Offer credit card, online payment, direct debit, cash, cheque and - if practical - electronic funds transfer (EFTPOS) at point of sale.

Credit cards in particular often make for earlier payment, particularly from business owners keen to earn reward points.

4. Cloud power

If you run a small business or a micro business, consider moving to cloud accounting, says Curtis. Deploying a cloud solution means that your accounts are always up-to-date.

Also, you can monitor who owes you what all the time, regardless of whether you are in the office or away on business, she says.

The cloud solutions that Curtis singles out are LiveAccounts and Xero. Other experts recommend Saasu.

5. Sticking terms

Most small businesses treat the collection process in the same manner they would a venomous snake in their kitchen, says director of AKA Group Accountants. Nobody wants to deal with it, Kyriacou says.

But as a successful business owner, you need to be firm with your trading terms. If your terms are seven days, enforce them with a phone call.

There's no point in having trading terms if your customers know that you fail to enforce them.

6. Rhythmic reminders

If you invoice monthly, send your invoices out on the same date each month. If you sell products, send out the invoices as the products go out, and follow up with an end-of-month statement, Kyriacou says.

7. Ruthless realism

Do not delude yourself that you can afford to keep a non-paying client, Kyriacou says. If the client fails to pay on time, they are eroding your profits by draining your cash flow and staff resources to service them.

8. Grace to complain

State on each invoice that any dispute over the transaction should be relayed within seven days of the date on the document, Kyriacou says.

9. Sweetheart deal

It always pays to sound sympathetic, experts advise. If you go ballistic, the customer in your sights may turn ugly.

10. Crunch time

If no other tactic works, enlist a collection agency. The longer you wait, the less likely you are to recoup the debt. So wait no longer than three months before getting heavy.

Thanks to David Wilson / Sydney Morning Herald
http://www.smh.com.au/small-business/managing/difficult-client-how-to-get-paid-on-time-every-time-20110914-1k8yh.html

 

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