I’ve put together my top 5 tips on how you can help your business get 25% more cash in the bank, just like we did.
1. Process
Through weekly meetings between myself and the directors, we’ve introduced more rigour to our process. We discuss numerous clients and decide who needs to receive nudges. This gets us into the habit of knowing exactly where our bank stands, so I’d encourage you to have frequent sessions to monitor the same.
We quickly realised during these meetings that we needed more standard chasing emails, more to be a ‘light nuisance’ rather than a heavy nudge, and this is where we implemented Chaser to help. This takes the admin burden away from us and saves time as well as automating another of our processes.
Clients now receive a reminder prior to their invoice being due, which highlights that the due date is approaching. This keeps us in the client’s mind and has also resulted in some clients paying us early! How’s that for efficient?
For the most part, we treat all clients the same, as our service is all about knowing your client. Some circumstances may trigger special treatment, but everyone follows the gist of the process. Otherwise, what would be the point? The process takes any emotional element away, which encourages us to stick to the process and chase in our cash.
To conclude the ‘process’ section… Be proactive. Nudge gently. Introduce and stick to your payment terms, whatever they may be.
2. Control
We tend to find that 95% of the client base have no issues with payment, and only 5% need a nudge.
To try and eliminate the need for worrying about that 5%, we introduced a control element, and aim to have all payments received through direct debit.
Most clients are happy to set this up.
Most clients are happy to set this up – they understand Blu Sky and the value of the work we do for them, they like our processes so know we’re keeping them right.
Try not to feel shy about requesting the same – if anything, it’s one less admin burden on your client to remember to pay manually, so a direct debit saves everyone time.
A direct debit mandate puts us in control. Do what you can to operate in the same way so that you hold the control over payments.
3. Communication
We found that by introducing an ‘accounts’ email address to send any credit control-related emails, we received more prompt responses from clients. Removing the personal element helped us in this instance, so the sender didn’t feel any anxiety about chasing, but also the recipient didn’t feel like they were being targeted by their Client Account Manager. This of course helps the relationship on a day to day basis, as there are no emotional worries relating to chasing for cash.
We totally appreciate that our clients are in the same boat!
We totally appreciate that our clients are in the same boat! They will have debts they need to chase, they will want to be paid, so they appreciate the process we have in place to ensure we are paid.
That being said, sometimes a personal touch is needed in the form of a phonecall. A chat can go a long way. We’re all human! Know your client and their relationship with you, so then you’ll know how they’ll respond to which communication methods to get you that cash in the bank.
4. Innovation
Over the last 4 years, the technology available has changed and helped our credit control process.
We used to work a week behind, but now we work by the minute!
Chaser is one example of this and is great; it prompts payment ahead of the due date without any need for manual input.
Although our preference is direct debit, we do have methods in place to take card payments in the office with iZettle. We also utilise PayPal and Stripe for paying over the phone, to ensure we can accommodate most payment methods that we may be presented with.
We find it very rare to be handed a lump of cash and the last cheque we received was just before Christmas, it’s usually only one every 2-3 months. If we do, we head straight to the bank so that it’s recorded online with our bank and visible to us.
Xero and Chaser are our main improvements in this area. They help us to be able to chase any outstanding fees on a daily basis if needed, as we have the ability to see what’s happening ‘live’. We used to work a week behind, but now we work by the minute!
5. Reporting
I now monitor our bank daily and report back to the Management team on a weekly basis with our progress. This covers expected sales for the period, potential concern areas and anything else that may need highlighting. We can then project, plan and implement any actions needed going forward.
From our frequent monitoring, we know that having an implemented process has helped us get 25% more cash in the bank.
All of the above improves your business understanding of where you are at any given moment. Without this money in the bank, how can you run an effective business? You need that cash in the bank to thrive and grow even further. It may seem a small thing, credit control, but actually it’s a major piece of the jigsaw that is your business.
