According to Atradius Group, a leading credit insurance company, 46% of all B2B sales are paid off on credit, and 48% of these payments are late. Finding effective ways to pay on time as a small business from late payers can be a major reason why a business fails or thrives.
As a business owner, these figures sound like a nightmare. Therefore, it is very important that businesses adopt new solutions to ensure that their payments are collected on time. It is also important for business owners to understand the financial strength of their business and the processes that can help create a Cash Flow. An important strategy to understand and improve Cash Flow is to use Cash Flow Forecasting, which can greatly improve the life of your business. We have also developed a cash flow guidance guide that can be very helpful in helping to plan for situations where collections are low, and shortages are possible. In collaboration with our internal debt management experts, we have outlined strategies to help improve collections.
Create credit policies and applications
The most common reason why businesses are not paid on time is because most of them do not have over-the-counter debt management policies and do not make pre-sale checks to their customers. Therefore, the first and most important step for any business, large or small, is to create credit management policies and a specific collection for their business.
Credit policy is basically a set of rules that are used to determine various aspects related to payment. This may include payment terms and procedures for the collection of these payments. In addition, a credit policy may include appropriate guidelines for dealing with non-payment accounts. You must ask your customers to complete a loan application before agreeing to offer a loan.
Create terms and conditions for your business
It is important for any business to prepare terms and conditions that should form part of the agreement signed with the customer. This reduces payment disputes which makes it easier for the business owner to better manage their business finances. Business owners may choose to seek legal advice to ensure that their terms and conditions are sufficient to protect their interests.
You can use our template to find out the terms and conditions found in our site growth hub. If it is still not clear, you can talk to our account writers who work on the credit control system and who can show you the process.
Consider the following scenarios when preparing your document for terms and conditions.
Mention and specify how and when to make a payment.
Specify late payment penalties and interest rate or amount.
Disclose any additional unpaid fees such as credit card fees.
All terms and conditions must be complied with by the government and the relevant legal authorities.
To avoid any dispute, business owners should ensure that their customers sign a document of the terms and conditions before providing any goods or services.
Five Steps to Credit Control Management
Change Invoices / cloud-based invoice management
Cloud-based accounting software is the future of billing production and invoicing. It is highly recommended that businesses implement their invoicing process through a payment application or accounting software program. As a business owner, you can talk to professional online accounting services writers who are ready to use the latest accounting software and who can help you get up and run in cloud software within minutes. Having an effective invoice system can improve the efficiency of the collection by up to 30% and will help your business get paid on time.
When choosing accounting software, make sure you choose the least expensive, easy-to-use and HMRC-compliant software. The process of producing traditional invoices takes a long time, and there is a high chance of losing track of the invoice sent or received. Creating your invoice production process will allow you to create, edit and send invoices from anywhere in the world. The software will also make it easier for you to track payments and provide reminders in case the payment is delayed. Our accounting team compiled a list of Top 5 Credit Control Software in the video below. Watch it to start setting up your credit control system with high performance.
Credit Control Software helps to build a healthy cash flow for your business and improve your credit management efficiency. Consider these 5 Software Control Software to improve your business finances.
Accept new payment methods
In the fast-paced era of science and technology, business owners are expected to be more flexible in the way they interact with their customers. Another flexibility that can be shown by business owners is that they are open to a variety of payment methods. Business owners should consider expanding their payment channels to make it easier for consumers to make transactions. The right payment system not only helps you repay your payments on time, but can also increase your sales.
As trends change in e-commerce, credit card payments are not the only way you can rely on them to accept payments. In addition to credit cards, consider accepting PayPal, EFT, ACH payments, direct bank transfers, and other methods that are relevant to your business and safe for you and your customers.