Are Bad Debts Ruining Your Cash Flow?
Do you resent those clients who aren’t paying you on time, especially when you have spent late nights getting your work done on time or getting their delivery to them it doesn’t seem fair.[new_line]
A poor and mismanaged cash flow is a disaster for any business. When you run out of cash, you can’t pay your suppliers or your staff and you have to borrow money. This can be an expensive option.[new_line]
Instead of getting bitter and twisted about it, not to mention extremely worried, use this system to manage your cash flow and start to feel in control of your debtors.[new_line]
1. Create an Invoice Due Date:[new_line]
Put it on your invoice. Maybe its 14 days, or 30 days, it is up to you. But you need to decide and then place it clearly on your invoice.[new_line]
2. Set yourself three reminders in your calendar:[new_line]
i) 2 days before it is due
ii) the due date
iii) 5 days after the due date [new_line]
3. Use the reminders like this:[new_line]
i) 2 days before hand – check if it has been paid[new_line]
If it has – great! If not, send them a reminder that the invoice is due on ‘x’ date, and that you are looking forward to their prompt payment.[new_line]
ii) On the due date – check again if it has been paid[new_line]
Fab if it has, you might even want to thank them. If it hasn’t been paid send them an email reminder requesting payment within 5 days.[new_line]
iii) 5 days after the due date – check again[new_line]
If it hasn’t been paid, call them and remind them of the due date and ask when it will be paid.[new_line]
At the end of the day, it is your responsibility to get paid on time. Some customers will manager their own cash flow by paying you as late as possible. If you set up a system and then set their expectations about how you deserve to be paid, this will help improve your cash flow and the health of your business.
- Decide what your invoice payment period will be
- Put it clearly on your invoice
- Set 3 calendar reminders – 2 days before due, on due and 5 days after
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