For many businesses, December is a challenging month when it comes to credit control and cash flow can become severely stretched as a result.
With so much to think about over the Christmas period, staff taking holiday and postal and processing delays, it’s not uncommon for payments to be missed.
With a little forward planning and a robust credit management strategy, however, you can ensure that you get paid on time and start the New Year with a healthy cash flow.
Christmas shut down period
If your customers pay by BACs you may fall victim to the non-processing days over the festive period. For example, if your customer is due to make payment before the New Year, then the payment process must begin on Wednesday, 27th December 2017 at the latest to ensure that it enters your bank account on time. Your customers might not be aware of this and as a result could unknowingly pay late.
Plus, some of your customers may close for a period over Christmas. Knowing your customers’ Christmas trading hours and planning around this can ensure you don’t risk payment delays. If possible, you should avoid raising invoices that are due to be paid on a bank holiday or during close-down periods. Instead, raise the invoice earlier than usual to minimise the risk of late payment.
Or, if this isn’t possible, you could attempt to negotiate earlier payment dates or offer early-settlement discounts to encourage early payment so that you can relax and enjoy the festive season safe in the knowledge that your invoices have been paid.
Whilst it’s important to invoice promptly and accurately all year round, it’s even more vital at Christmas when postal issues could delay payment.
With all those Christmas cards and letters to Santa clogging up the post, delivery times at Christmas can be stretched.
So, where possible, opt for email over posting invoices as any delays or lost letters give your customers an excuse to delay payment. Likewise, if your customers pay by cheque you could find that they arrive later than usual.
Whilst this may be a genuine mistake, there are some customers which will use ‘the cheque is in the post’ as an excuse to stall making payment.
So, it might be worth considering asking for payment in alternative methods this Christmas.
It’s also important to make sure you follow the initial invoice up with a courtesy call to confirm that it has been received and check your customers’ plans for payment. This is the perfect time for your customer to explain that they are going on holiday or the office will be closed, and you can make alternative arrangements for payment.
It’s important to be persistent to remain at the front of the queue for payment – especially over the Christmas period, where your customers’ resources may be even more stretched.
If you have debts on your ledger that are already outstanding, it’s vital to act on them now. With so much to consider over the festive period, it can be easy to let old debts slip to the bottom of your list. But this could be a big mistake.
If you wait until the New Year your debtors will have other pressures and you may find yourself slipping to the bottom of the queue for payment.
When your own internal resources are stretched over the festive season, it could be beneficial to outsource your debt recovery to a specialist collections agency. This will free up time for your team to focus on other aspects of credit control.
Plus, introducing a third party could give your customers that extra push and encourage them to pay up so you can enter 2018 in a stronger position