10 TIPS FOR BETTER SALES LEDGER MANAGEMENT or HOW TO AVOID BEING OWED MONEY

1. Credit check your clients – this may seem costly and cause a minor delay but would you lend a stranger a tenner? You are about to lend them hundreds of pounds of goods or services!
2. Get a good Credit Insurance policy – a luxury to some but this is what I class as sleep-easy month! A single client going bust not only costs you your margin but you end up paying for the goods or services provided as well. Too many businesses go bust because of just one of their customers goes out of business. A good CI policy at least allows the Directors to sleep easy and you may even get your money’s worth!
3. Accurate invoicing – this sounds basic but too often invoices go out with the wrong details (addresses, charges). If you give 30 day terms you can bet you won’t be told about the problem for 30 days at least, therefore delaying your cashflow.
4. Swift invoicing – The terms only start ticking once you issue your invoice. Don’t delay this while chasing new sales – if you don’t get paid for existing sales, new sales will only replace rather than develop your business!
5. Early telephone chasing – if an invoice becomes overdue don’t leave it for another week. A gentle call often secures money and if your client takes umbridge this is a fair indication that there is a problem.
6. Recognise early danger signs (delayed payment, failed promises, lack of contact) – any of these should set the alarm bells ringing. Don’t dismiss this as “it will be resolved next week because it always is”.
7. Don’t be afraid to put clients on Stop! – this is the best leverage you have and don’t think a client will just go elsewhere for supplies. The right follow-up action will jeopardise their credit rating and others won’t want to supply them either.
8. Avoid going legal too soon! – Too many people go from doing nothing straight to a solicitor’s letter. This is a sure way of making sure you lose the client and also is costly as you pay for this even if unsuccessful, and it costs you a client.
9. Use a Debt Collection Agency promptly – these people are expert in collecting overdues as this is all they do. The earlier they can help the more they can help as if a client has not got the money, then they have no money, but a good DCA will ensure you get to the top of the list, if they do have some money.
10. Choose a SME Debt Collection Agency that understands your business – value your brand capital – it’s your most important asset. Don’t risk a partner sullying it for you by using the wrong approach, and or being too heavy-handed. A good DCA will take time to understand your business, your philosophies and your practices before doing anything with your invoices. Some can even operate in your name so it doesn’t appear that you are using a debt collector but you still benefit from having the superior skills working for you.