Good credit management is an important business strategy to maintain cash flow and stable finances.
A cornerstone of managing credit is not only making sure an invoice gets paid, but gets paid on time. With the holiday season quickly approaching, some industries may find delays occurring in settling customer debts.
Efficient credit management entails ensuring timely payment of invoices, which assumes critical importance during the holiday season when delays are likely to occur.
Prepare Your Customers
Ensuring customers understand their payment terms from the start is the first step in training them to keep track of outstanding invoices and payment due dates.
Keep Detailed Records
Businesses should keep all customer records, such as payment term agreements, customer limits and outstanding sales to date.
Follow Up Regularly
Taking proactive measures, such as initiating follow-up procedures promptly after a payment becomes overdue, can significantly expedite the payment process. Additionally, it is crucial to identify the correct point of contact for payment matters, as this individual may differ from the person you were previously liaising with during the transaction process.
Implement Payment in Full
Most businesses adopt this policy in regard to payment procedures. This way, the customer has a total amount to pay by a concrete due date. Sometimes making it easier for the customer by staggering payments and due dates can confuse and delay payments even further.
For labour and time-intensive work, some businesses ask for part-payment or deposit up front. This works as a way of showing that the customer is financially committed to the project. It also allows a business to better manage cash flow, knowing that there won’t be months at a time when no payments are coming in because of works in progress.
Thank you for reading!
Should you have any queries in regards to the above please contact our office on (03) 9728 1448
The TAS Team
3/653 Mountain Highway, Bayswater VIC 3153
Dorothea Farmakis (CPA)
Dorothea, our CPA Qualified Accountant (Registered Tax Agent), has over 25 years experience within international corporate firms in Accountancy, Funds Management and Asset Management for firms such as HSBC, P&O, Lend Lease and more.
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