Tuesday, 27 September 2016
Singapore is part of a bustling global economy, with billions exchanging hands daily. But money is a sensitive issue and can cause embarrassment if not dealt with efficiently and effectively. You know that the quicker you get paid, the more you get paid. Having a plan can make you appear professional and reputable, whilst keeping aged debtors to a minimum.
How can you reduce your aged debtors and improve your cash flow? Here are nine easy tips that will help reduce your aged debt:
1. Make your terms clear from the start!
When you begin working with your customers make it clear to them when you expect to be paid. This might sound obvious but some companies simply assume there is a 30-day window of payment, after which they can expect a series of reminders over a number of months. If this approach will make your cash flow slow, then make sure from the start that you expect different terms from your customers. This should be clear to customers at the start of the working relationship and avoid any chance that they become an aged debtor.
2. Invoice promptly!
Waiting until the end of the month to send out invoices can increase your perception that the debtor is slow in payment. Send out the invoice as soon as the work is complete or the product has been delivered and you give your customers chance to pay quickly – stop aged debt before it starts with efficient communication with your customer.
3. Make it easy to pay!
Write the date clearly at the top and the date you expect payment. Repeat the expected date of payment at the bottom and give the customer clear details of how to pay. Give account details they should pay into or a button on your website and you are paving the way to quick payment. Remember the debtor is as busy as you are, therefore they do not have time to work out how they should pay you. Even a phone call can seem too much when your day is filled with paying invoices and doing your own work. Grease the wheels and make your business the easiest of all to pay – you are not alone. One in four companies in Singapore struggle to retrieve debt and many of these write off the debt or are still waiting after 80 days. Therefore, you need to be the clearest, loudest voice in the crowd.
4. Go digital and automate!
Using online statements and automated emails will keep the process standard. You, your customers and your employers can all track the same information in real time. This will reduce the risk of confusion. Also, having a strict procedure that you follow will reduce the risk of upset in customers when you start chasing for money. If your customers are clear that this is a standard routine, they will not assume your communication is a reflection on their level of trustworthiness. Standard letters and standard language also reduces the risk of legal problems or conflicts arising from ambiguous language. Remember that money is a sensitive issue and none of your customers want to be known as an aged debtor. Respect should be at the heart of all we do as business people in Singapore.
5. Create a clear audit trail, held in a central space!
Make sure that all communication and payments made from a customer are held in a central location. Ensuring that all actions taken against an account are tracked allows for joined up action by your staff. There is nothing more embarrassing than a customer receiving more than one communication from you with conflicting messages. A clear audit trail should help you track aged debt before it gets out of control.
6. Write a dispute resolution plan!
Write a clear mission statement and action plan for team, so they understand how they should resolve disputes with customers who are refusing to pay. If there is something wrong with the service or product, or if a deadline has not been met by your company, then your employee should be clear on what they are expected to do. Giving your employees a clearly defined procedure will smooth the process and help them to retrieve the money as quickly as possible. The employee should always know when they should send the account to a line manager and when they should be able to resolve it themselves. It might not be that the debt is old, it might just be that they are not satisfied with your service just yet.
Offer your staff incentives for retrieving the payment of an aged debt. Set the employees clear targets and if achieved a bonus that they will receive. This will work on two levels, firstly you will have set a clear timeline for the retrieval of cash into your business and secondly, it will make your employees personally invested in the retrieval of debt. People are going to be far more persuasive if they are likely to be directly rewarded when successful.
8. Get to know your customers!
Encourage your staff to get to know your debtors. Some customers are good at paying the large bills but may leave smaller invoices for longer. Some customers only respond to constant nagging – paying the loudest collectors first. Some customers will have a payment cycle of their own, which means they will release funds when the cash flows into their business. Knowing your customers can help you structure the account in a way that helps them.
9. Be prepared to escalate!
When the time has come to accept that the debtor does not intend to pay, then you must have systems in place to take it to another level. This escalation might involve moving up the leadership chan. However, when this doesn’t work you need a final step that you will take. Outsourcing aged debt can feel ruthless and damaging to customer relationships but the truth is that you should not be happy to continue work with that customer if they are not making payments.
Therefore, going to sites such as https//:debt-collector-singapore.com.sg/ and seeking the support of a specialist company can make sure you retrieve what is owed to you. The testimonials of companies such as these prove that debt does not need to be written off, it can be retrieved reputably.