- Set out clear credit terms and a credit limit to ensure creditors pay you promptly.
- Check any new customers' credit score using a reference checking agency.
- Set out your terms and conditions - as well as late-payment interest in writing. To secure your cash flow, you need to collect payments effectively.
- Specify various payment options to make it as easy as possible for customers to pay you.
- Offer discounts for early payment, or other incentives such as money off a customer's next order to avoid late payment.
- Keep track of or recording when payments are due and send reminders if necessary including late payment interest charge if the delay exceeds your agreed payment period.
- If a debt remains unpaid, call and email alert to customer you are serious about it by employing a debt collection agency.
- Send a formal letter to inform that you will take legal execution to demand for payment if the customer still refuses to pay.
- Buy trade credit insurance to protect yourself against customer insolvency. Insurers typically cover between 75 and 95 per cent of the risk, while you cover the remaining.
Day 1: Issue invoice and send to customers Day 15: Call customers to check for receipt of invoice Day 31: Call customers and ask for payment Day 45: Send demanding payment letter Day 50: Call customers to chase for debt Day 60: Send 2nd demanding payment letter Day 90: Pass issue to legal department to chase for debt