As most businesses will attest, getting customers to pay an invoice on time can be challenging. The failure to pay an invoice can occur for a number of reasons. It can range from faulty goods being received, to incorrect paperwork, all the way to fraud. However, did you know one of the most common reasons for invoices not being paid is as simple as a lack of cash?
Credit risk monitoring is key
Non-payment of invoices can cause unnecessary stress in your work. Not only does it require more workload in chasing the client, it also impacts your own organisation’s cash flow. Credit risk monitoring is therefore key to ensuring you get paid. With the help of credit risk management software, you have the correct procedures and policies in place to prevent non-payment.
Here are our top four tips to ensure you get paid:
1. KYC = Know Your Customer
One of the first steps in credit risk monitoring is KYC. Getting a new client is great, but be sure to ask basic questions such as, who is this customer? What is their background and why have they come to my organisation? Perform pre-sales credit checks to determine whether all the accounts are up-to-date, if it is an established company, and if this is a customer you would like to take on.
2. Establish clear terms of trading
Be sure to clearly communicate your terms of trading from the onset of the relationship, and that payments must be made within these terms. This way you can avoid misinterpretations and clients can flag possible issues beforehand.
3. Implement strict credit control terms
Credit risk monitoring relies a lot on strict rules and adhering to them. Ensure your customers are made aware of the consequences of failure to comply. For instance, if they fail to make payment within 30 days, on the 31st day your credit control team will chase for payment, and on the 35th day you will send the debt off to a third-party collection agency.
4. Align your sales team
Your sales team will be the first ones to deal with customers and will generally prioritise the sale. Ensure your sales team is aligned with your credit control procedures in order to prevent any deviation when agreeing to a sale.
Evolve with credit risk management software
Did you know that automation helps take away some of the drudgery of collection management? Be sure to move with the times and evolve all business procedures by implementing a modern-day credit management system. Contact us today to find out more about credit risk management software and what it can do for your organisation.
