Good credit control
For me no customer is worth having unless they pay your bill in full on time.
In that training example I wrote about in my blog earlier this week, if they hadn’t won that contract they would never have had a cashflow problem. The owner thought having ￡1m in additional revenue was more important. I would say having a cashflow positive business with ￡1m less revenue was more important.
I would ensure the following credit control is in place:
The day I send the invoice I call the customer to say I have just sent you an invoice, did you receive it? Its due on X date. These irons out any disputes or queries.
Two days before its due I call the client and say, “your invoice is due on X – just checking it’s on your payment system”.
If it doesn’t get paid on time, I call them 24 hours after the due date to find out why it was paid.
Then every 5 days thereafter I will call them and send them a chaser email/letter. If they won’t pay because they are disputing it, I get them to pay the undisputed part.
If they can’t pay I ask when they will be able to pay, try and get part payment.
Anything I say I back up in an email so if you must take the matter legal, you have a good paper trial of what was said & agreed.
Sometimes business owners say to me “I don’t like chasing customers in case I upset them” – that is stupid – you are a small business, trying to survive, you have delivered some work which you need paying for – if a customer has a cashflow problem or is refusing to pay – that’s not your problem.
About Paul
Paul Seabridge is a Cypriot/UK based Business Investor & Owner of Private Equity, Mergers & Acquisitions Firm Kleinsman Global LLC. He is sector agnostic buys, sells, invests in & merges SMEs in the US, UK & Europe. He also works runs a 3 day experiential training event for business owners were you can learn how to grow your business significantly, stably & quickly. You here from people that have been there, done it (sometimes more than once) and share their skills & expertise. The event also puts you in front of high net worth investors who are looking to invest in great businesses that want to scale. You can learn more at https://www.paulseabridge.com and www.paulseabridge.com/growth-summit/