Six Tips To Collect Money Faster And Improve Debtor Relationships

This month, Leverage Technologies asked the CEO of ezyCollect to share his tips on debtor management. Aj Singh co-founded ezyCollect three years ago after struggling with late payments in a previous wholesale business. Now, ezyCollect automates credit control and debtor management for over 1800 companies worldwide.

As the CEO of an automated accounts receivable software, I’m a fan of having a disciplined process to streamline the invoice-to-cash process. But that doesn’t mean that customer relationships aren’t just as important. In fact, hand-in-hand, your process and your communications can help you to successfully collect overdue accounts. In my experience, good communication, backed by a disciplined process, not only prompts debtors to pay, it can turn them into repeat customers with a deep loyalty to your business.

Here are some tips to supercharge your debt collection efforts and customer relationships

1. Don’t be the business owner and the invoice chaser

Business owners wear many hats, and when you’re also the sales person it can feel awkward to then ask your customers to pay their bills. What tends to happen is that business owners fail to chase, and mistakenly allow their customers to keep the accruing debt. Business owners should separate themselves from chasing tasks, either by outsourcing to a staff member, external bookkeeper, or automation that can issue invoices from a generic email address from your business.

2. Optimise your invoice

Your invoice should act like your accounts team knocking on your customer’s door, asking to be paid. You can optimise your invoice by making sure it’s issued promptly and without errors or omissions. Make sure the due date is clearly stated at the top of the invoice. Include your payment methods and terms of trade on your invoices. The very best invoices are sent electronically and have a link for customers to pay online, providing customers with an instant opportunity to click and pay.

3. Be upfront with your credit terms

Establish your payment expectations early by asking your customers to submit a credit application form before you issue them trade credit. This sets the ground rules for your future transactions and communicates to debtors that you manage your cash flow responsibly. Leading with your prompt payments culture sets a professional standard that reflects well on the rest of your business.

4. Personalise reminders but don’t get personal

Sending payment reminders will be a regular task if you are issuing trade credit. Customers rely on reminders, but that doesn’t mean they respond to them. To increase your chances of getting a positive response from your email reminders, avoid generic emails to ‘Dear accounts…’, and steer clear of confrontational language.

Here’s an example of a reminder email you can customise for your business:

‘Hi <firstname>,
I hope your day is going well.

I haven’t seen your payment for <invoice number/s> arrive as expected. I appreciate that this could be an oversight. As your account is now <no.of days> overdue I hope you can complete payment for <total overdue> by 4pm on <insert date> to avoid incurring late payment fees as per our contract.

If that’s not possible, I look forward to speaking with you today so we can discuss payment of your overdue invoices and make arrangements if necessary.

You can click to pay online here <insert link to online payments> or complete payment by any method listed below.

<list all payment methods accepted.>

If your payment is in transit, then please let me know and I will keep an eye out for it.

Thank you and I look forward to doing business again soon.

5. Help debtors to understand their debt

Your debtors’ inboxes are likely to be as overwhelming as yours, so show respect for their time and attention by being succinct when communicating about late payments.

Communicate about totals overdue, attach copies of invoices, include due dates and payment methods accepted. A monthly statement helps debtors with multiple invoices to reconcile payments with the orders they’ve made. Minimise the steps your debtor has to take to understand their debt and settle their account.

6. Admit your mistakes

If you’re struggling with a late payments problem, it’s possible that you’ve contributed to it through your own actions or inactions. When you’re ready to reverse your aged receivables, honestly communicate with your debtors that things need to change. Acknowledge that your business is taking steps to better manage its credit control, and express that you want to build a business that’s better for you and your customers. Invite your customers to give you feedback on why it’s been difficult to pay you and commit to considering and actioning your customers’ feedback. Your authentic communication humanises your business and makes customers feel like valued partners, and that builds loyalty.

Conclusion

Systemising your invoice-to-cash process is one of the many advantages that a modern, Cloud-based solution can bring to your business. Today’s organisations can count on a vast array of technologies to streamline their finance but also manufacturing, distribution, operations and more.

ezyCollect offers a free trial period to try out their customisable automated reminders and credit control system. The system also integrates seamlessly with MYOB Advanced to give you complete flexibility.

For more information on ezyCollect or MYOB Advanced call us today on 1300 045 046 or email info@leveragetech.com.au.