Tag: direct debit

We can’t send you your invoice because our accountants are so behind with processing direct debits

Normally I’m delighted to hear that a business is getting paid by direct debit because DD is the silver bullet of credit control.

But when I heard a senior manager in XYZ Limited say this about their invoicing and their accountants, you could have knocked me down with a feather!

So, let’s see how they could have avoided getting into this mess in the first place.

Raise your sales invoices as soon as you can

Every business needs to raise its sales invoices as soon as it can. Make sure they are:

  • correctly describing the goods / services sold and are correctly priced
  • addressed to the correct person and contain a PO number if required
  • sent by email – ideally as a PDF not as a link. Why make it difficult for your customer?
  • accounted for as soon as possible if they’re not raised in your accounting software

Do this and you know how your business is performing from a sales perspective and you know how much money you are owed.

Get cracking with credit control straight away

Credit control differs for every business but however you go about credit control get started straight away so your invoices have the best chance of being paid on time.

This blog isn’t about credit control but there are a couple of links at the end which you might find helpful if you’re a bit rusty.

This blog doesn’t need to be about credit control because XYZ Limited gets paid by direct debit!

What could have been done differently?

It so happens that we use the same direct debit provider as XYZ Limited and this is how we would have gone about things.

The first step is to link the direct debit service to your accounting software.

As new clients come on board you send them a direct debit mandate to complete, stating your payment terms clearly so the client knows when their payments to you will leave their account.

Pro tip: If a client won’t sign up to direct debit you should seriously consider not working with them as they could well turn out to be a bad credit risk. And who needs that?

Raise your invoice, using the agreed payment terms, and send it to your client.

Sit back, relax and you’ll be paid on time. And if you use the combination of DD provider and accounting software that we use, the accounting for the payment will be done automatically.

Bookkeeping in the 21st century

There’s a link below to a blog about this.

Essentially we live in an age in which all sorts of online platforms exist for making sales and receiving customer payments.

This is generally a good thing but it does require businesses, bookkeepers and accountants to know what they’re doing and walk through every step of the sales process, from order to payment, making sure everything happens in the right order and is working correctly.

You establish workflows that work and scale from there.

It seems that XYZ Limited and their accountants have somehow tied themselves up in knots with a very visible outcome – XYZ’s clients aren’t getting their invoices even though they have made their payments.

Not a good look for XYZ Limited!

Workflows, accounting, getting paid – can we help?

Let’s have a free-of-charge chat about your business – call Michael Austin on 020 7125 0270 or email info@bluedotconsulting.co.uk

Michael

Related links:

This is bookkeeping in the 21st century

Five tips to improve your sales invoicing

Getting paid on time – your company is NOT a source of alternative finance!

© Blue Dot Consulting Limited

Chartered Accountants – Bedford House, Fulham Green, London, SW6 3JW

She’s a bulldozer when it comes to credit control and getting paid

I’m sure there are awards ceremonies for credit control and getting paid but if they don’t present the Golden Bulldozer award then something is badly wrong in the world of credit management.

I’m sure there are awards ceremonies for credit control and getting paid but if they don’t present the Golden Bulldozer award then something is badly wrong in the world of credit management.

The changing face of credit control

Over the years, working practices and technology have changed but the basic need for good credit control has not.

Cash is king and businesses fail because they run out of money – so staying on top of credit control and getting paid is not optional, it’s fundamental.

From a tech perspective, most business have bookkeeping software which is far more accessible and powerful than it used to be.

Your bookkeeping software will contain some credit control tools such as:

  • reports of debtors and how old they are
  • a direct feed from your bank account so you can see money coming in each day
  • automated reminders being sent by email to late payers
  • statements of unpaid invoices that can be sent by email
  • there are also credit management apps that can be integrated into your software

Learn what tools are available to your business and use them.

Direct debit is your new best friend

Frequent readers of this blog will know that we mention GoCardless quite often.

GoCardless is a direct debit service that links in to your bookkeeping software and collects invoice payments from customers automatically by direct debit using whatever payment terms you and your customer agree.

The more customers you can sign up to a direct debit service the less of a headache credit control will be.

It’s also an early warning sign – if a new customer won’t sign up to direct debit then perhaps it’s because they are a bad payer you shouldn’t sell to them.

Get the basics right

Credit control is so much easier if you get the basics right. Such as:

  • have a contract or standard terms and conditions agreed in writing at the outset
  • send invoices, by email, punctually, to the correct contacts, making sure they are for the correct products or services, the agreed price and agreed payment terms
  • put your bank account details on your invoices, customer statements and any other credit control documents
  • send the PDF not a link – why make it more difficult for your customer to access your invoice?
  • if you invoice a customer the same amount each month then set up an automated invoice in your bookkeeping software

Get on the phone

This is where the bulldozer comment came in.

It was a huge compliment paid by the finance manager about her colleague who is responsible for credit control in their business.

There is no substitute for polite but tenacious phone calls to get customers to pay.

And support your credit control team by involving your sales and account management people in credit control. If you only pay commission when sales invoices have been paid then this tends to motivate sales people to help with credit control.

And if everything you’ve tried has failed then stop providing products and services to non-payers and consider legal action.

Credit control and getting paid

Credit control needs to be front and centre in many businesses.

There’s a cost to doing credit control but the costs of not doing it can be far greater.

Be organised, used the technology available and be tenacious. And above all:

Be more bulldozer!

Michael – @bluedotmichael

Related links:

Get paid quicker – 5 ways to avoid bad credit risks

Get paid quicker – 5 tips to improve your sales invoices

Getting paid on time – your company is NOT a source of alternative finance!

© Blue Dot Consulting Limited

Five tips to improve your sales invoicing

If you are being paid on credit terms then sending the URL instead of the invoice is simply creating a reason for your invoice not to be paid.

Sales invoicing is vital whatever you are selling: you have to get your invoices out to customers in good time or face ongoing cashflow difficulties that could make you go bust. Continue reading “Five tips to improve your sales invoicing”