How to avoid bad debts
While scrolling through one of the groups on Facebook I came across a recommendation for Fran at Late Payer List. Naturally, this sparked my curiosity so I jumped over to her website, reading through the concept I knew that MANY SMALL BUSINESS owners could use this type of system. What I found was a website with simple easy to understand information about an affordable process to help to get your late payers under control. Immediately I asked Fran to write this blog so I could share it with the followers of My Sassy Business. This is not a sponsored blog it is just me genuinely offering you information about another business that may benefit your business.
Kelly @ My Sassy Business.
Imagine a world where everyone paid on time
It takes many years of hard work and education to get to the point where you are ready to bite the bullet and start running your own business. First comes your great idea followed by the development of that idea. Next is the marketing and nurturing of new customers and eventually the sale of your business’s goods or service to them.
Sometime down the track as your business grows and you move out of the garage and into an office or shopfront you may even get the chance to employ great people to help you grow even more. What is often overlooked are the credit-control systems that you are going to need that will help you get paid on time. Cashflow is the lifeblood of every business and without it, your business won’t last long.
The first step that you need to consider is a set of Terms and Conditions that your customers must agree with before you enter into any transactions. If you do not have terms IN WRITING and agreed to PRIOR to the debt being incurred then you have no terms at all. Simply sending an invoice with your terms written on it is not good enough, the debt has already been incurred so at this point it is already too late.
It is a good idea to have your terms prepared professionally and tailored to your business. Some useful information to consider in including in your T&C’s are:
- What it is that you are going to offer (your good or service)
- What it will cost your customer
- When you will supply your good or service
- The payment methods you accept and when payment is expected.
- And what happens if your customer doesn’t pay; i.e. your credit control policy.
How to take action
The next step to consider is getting paid by those who seem a little reluctant to part with their own money. This is an area that often doesn’t get enough consideration because let’s face it, we assume everyone will pay. There is a range of software programs available to automate the collection process. These packages help with the process, however, all that they do is digitise the age-old process of reminder letters and phone calls.
Unfortunately, with these technological advances, we are not seeing any real change in the behavioural problem of late payment. As acknowledged by Dunn and Bradstreet, Australian debt to business sits at around $21 billion.
Clearly for the late payment problem to be disrupted something has to change!
If we as business owners are to change the payment practices of late-paying customers, then we need to change our own behaviour, practices and attitudes, not just the technology.
This means taking action that makes a difference, delivering the money to the pocket of the people who earn it. Until then, small businesses will continue to be seen as a free source of goods and services. While automated emails, letters and phone calls can work, at the end of the day there is no motivation or obligation for late payers to comply.
Changing the behavioural patterns of late payers was the inspiration for the establishment of the Late Payer List. It provides a quantitive consequence for a customer who doesn’t pay you on time and is an affordable simple alternative to debt collectors and solicitors.
This online B2B platform allows you to register any late payers that you may have. This only takes a couple of minutes and costs the same as a cup of coffee.
The Late Payer List then contacts your late payer informing them that they have seven days in which to pay you. Not paying you leaves them open to being listed on the National Database for other members to see. It is a pretty powerful incentive for your late payer to pay you.
The good part about this is that the member has complete control of the listing process, choosing whether to list their late payer or not. Listing on the Late Payer List is quick easy and cost-effective and 90% of late payers registered pay our members within seven days.
So take the time to check out Late Payer List and if you have any questions just get in touch with their team directly. I hope that for just the cost of a coffee you can get any of your late payers up to date with their payments and your cash flow running smoothly.