- Change your view of credit management: credit management is not an obstacle to sales. Remember – if you don’t get paid, a sale is not a sale. Get your sales team on-site, and get them to communicate with the admin team. Align the interests of your sales team with the interests of the collections team by withholding commission payable until the customer has paid you.
- Once you have extended credit to a customer, you are no longer just their supplier. You have become their banker. Think like one. Keep track of their payment habits. Keep notes, and track their payment history. Assess the risk and the return of each customer.
- Chasing payments and absorbing the cost of late payment or non-payment can damage your profitability and your cash flow. Make sure you are in constant communication with your customer. The longer an invoice remain unpaid, the less likely you are to get paid.
- Take the time to create a routine for invoicing and collections and stick to it. Organisations like to delay payment, so don’t appear disorganized. Send them friendly (or not so friendly) reminders, and keep track of all conversations.
- If you sell on credit, your most important source of cash flow is your accounts receivable. Generating an accurate cash flow forecast is time-consuming. Find a software tool that works for you, and then use it. It will pay for itself over and over again.