DIY Guide On How To Collect Cash Quicker From Your Debtors

 

Here are our top cash collection tips:

cash collection EFM 1. Analyse
Before you start any credit control process, analyse your customer base using the PARETO rule. This is the 20% of your customer base that gives you the 80% of your income. This knowledge will help you decide which strategy is most appropriate to implement for each group as you have to deal strategically with your most profitable clients, and sometimes differently with your least profitable ones.

2. Control
When you make a telephone call for the purpose of cash collection, be persistent but never lose your temper. If you do this, you lose control and you want to have influence over any actions to be taken. Ask for full name details and a commitment to pay. Always record your calls and any promises made.

3. Mind your language

Sell the need to pay. Whether you choose written or verbal communication, use positive words, for example, say that ‘we are more than happy to continue…’ rather than ‘we will stop providing…’People respond more favourably to positive language.

4. Offer options
Offer alternative methods of paying such as CHAPs, BACS, direct debit etc. Check for invoicing errors, investigate disputes and split payments into disputed and undisputed amounts to get some of the cash in where disputes exist.

5. Terms and Conditions
Review your terms and conditions and refer to them especially before contracts are signed. Review also the terms of your debtors and note specific defaults. Mention late penalty charges and threaten through to legal action where necessary. Always communicate with facts however. What are the payment terms? What is the interest on overdue accounts?

6. Outsource if you need to!
There is a wide range of support services available. Research and investigate thoroughly.

EFM provides financial management services from Bookkeeping and Credit Control through to Finance Director / Non-Executive Director levels. For more information about the full range of services, request a call back or contact us here.


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