Debt when not managed when can be cancerous to businesses especially small businesses, this means creditor are people that we do not want in any business organizations. The problem with this is that you cannot have customers without few defaulters and creditors, you just need to know how to reduce the number of these people.
This article will help you to reduce the number of creditors you have presently in your business and help with future numbers.
Set Credit Limits
Set the limit to which customers can get a credit and make it pronounced when a customer is requesting for credit, you can also change the limit as the cash flow of the company reduces or increases. This can also be set according to the amount of credit that is on the ground already. Consider setting a lower credit limit for new customers until you are confident that they can and will pay you on time.
Draw Up A Clear Terms And Conditions
Draw this up with your professional/legal adviser. This will be seen by acknowledged by customers that are interested in getting credit from your business. Publicise your terms on your website and send a copy with your goods and invoices.
Include a clause stating that you continue to own goods until they have been paid for, and requiring customers to draw your attention to any delivery problems promptly. Remind customers that you have a statutory right to charge interest on late payments (even if you do not plan to enforce this right).
Send Your Invoice Promptly And Shortly Before The Debt Is Due
It is important to make your creditors aware of their due date, this will make them prepare for the payback and also reduce the case of default. Do not wait until it is due, send soft reminders. Actively chasing due debts is a vital part of minimizing late payments. The sooner you do this the sooner it should be paid.
Automating Payment helps the customer to pay faster and better, even if the cash is necessary not with them with the use of a POS machine or related tools they can easily pay.
Note: Make payment for your services as easy as possible, this will motivate your customers to pay as soon as they can.