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Asking for money is probably one of the least enjoyable jobs in business.  If it isn’t handled right, it can have a massive impact on the health and viability of the business.

There is a lot more to getting paid than just asking for money. Getting paid is the result of a whole lot of other actions that flow through the business. Almost everyone involved in the business can have an impact on how quickly you get paid.

Here is a summary of what to focus on to ensure you get paid as quickly as possible.

1.      Responsibility for getting paid starts with sales

Your sales team need to understand your ‘Terms of Business’ and when to raise the subject of payment with customers.  Any variations on contracts need to be documented and approved to avoid reasons not to pay for them. Allow in contracts for deposits and progress payments if possible. 

Customer dissatisfaction is a big ‘non payment’ excuse, so not allowing this to occur is a must.

2.      Credit Risk

This is a big issue right now with businesses folding and many struggling. You need to be confident of the financial health of customers. It is not unreasonable to ask to see customers’ Financials…real estate landlords do! 

You’ll need a ‘Credit Application Form’ that ties in with your ‘Terms of Business’ and meets the ‘Privacy Act’ i.e. you need authority to do the checking. Credit references can be useful but should not be relied upon alone, as you are probably going to be given selected good ones.

It’s important to verify who new customers are.  You should check their registered and trading name.  Check the type of entity eg. company, partnership, sole trader, trust as well as the registered address and primary business address and date of incorporation.  If it’s an individual you are doing business with check their date of birth and drivers’ license number. If any of the information doesn’t match up or seems suspicious you need to investigate further and not allow credit to go ahead.

3.      The Process

The place to begin is documentation of your process, so that everyone knows what is expected and understands the importance of each step. You want to avoid giving a customer any excuse at all not to pay you. 

In service industries the Project Manager must work to ensure that the client is happy with quality and progress of work. It helps to get a Project Manager to pre-approve percentage complete on jobs and the amount of proposed progress invoices. 

4.      Invoicing

The most vital point about invoicing is to get it done ASAP. Why give a customer an extra 20 to 30 days of credit? If possible arrange for invoices to be sent with goods and invoice progress payments on jobs/services. 

Have a system for immediately invoicing services. Follow up on major invoices to ensure the client has received the invoice. Invoices can often be delayed by the authorisation process, or going astray.