Don’t let attraction of new customers mask the importance of prevention of unpaid invoices
A survey just out, commissioned by HSBC Commercial Banking, has illustrated that attracting new customers is top of the agenda for many UK SMEs – being a ‘number one concern’.
It’s an easy objective to relate to as customers lie at the heart of every business and are key to survival and growth. However, it is easy to get caught up in the excitement of the notion of prospective new customers, and sideline the importance of why we’re all in business – to make money!
What we mean by this is that it is equally important to ensure payment from new customers is as ‘sure’ as it can be.
Do the right checks – the financial position of a prospective customer is something worth checking out. Some caution in a new business relationship will go a long way to avoiding a potential issue or even catastrophe further down the line. There are a plethora of business check services available providing financial checks. Our Business Protect service is a fully comprehensive solution that can also offer continual monitoring for early indication of potential rough seas ahead!
Be clear on payment procedures – being in-the-know about a customer’s payment procedures is critical as many issues around unpaid invoices are down to a misunderstanding of processes. Finding out what the terms are, whether there are any special requirements such as purchase order numbers on invoices and which contact they need to be sent to in order to be processed is advisable. In addition, be sure they know and agree to your terms of payment.
Stay in touch – calling after sending an invoice to check it has been received is a good way to ensure it hasn’t gone astray and has reached the right department or person. It’s also wise to call as the payment deadline looms to check all is in order and that no delay is likely on payment.
Don’t be afraid to chase – a recent survey showed that many SMEs felt that chasing payment could harm the relationship with their customer – therefore letting them get away with unpaid invoices! It is reasonable to expect prompt payment as per an agreement made and a service or goods delivered, so chasing for payment should not be considered detrimental.
Unpaid invoices are a real issue for small businesses and can be detrimental if not fatal for some companies – so a little preparation, come good communication and on going monitoring and management will keep cash flowing.