We all know that getting paid on time is extremely important when it comes to managing a good cash flow. This helps us to get going with a profitable business. As they say, “money makes the world go round”.
Here are 5 useful steps to improve trust in your clients, customers, and suppliers when it comes to payments.
It’s always best to perform a credit check to determine if your client is able to pay off their debt to you. While it may be common knowledge to request your own personal credit report, what’s less known is that Australian organisations can find out more information relating to a company or individual’s credit history.
2. Invoice correctly
If you need to cross check, the Australian government website is a great source of information when it comes to ensuring you are sending out invoices correctly.
The website includes how to create an invoice, what to include, the different types of invoices and other helpful information that may assist you when preparing for an invoice.
You should also put in place a robust system to track what invoices have been paid. This helps you to stay on top of your payments in a timely manner.
3. Debt recovery
As a business owner, there will be a time when you experience a late payment that turns into a “debt recovery” situation. What do you do when you are in this situation? The Australian Government’s Business website advises that first you review the terms of the contract for payment conditions and debt recovery options.
It’s possible for you to even consider including a charging clause over all or some of the customer’s assets in your terms of trade, which you can then register on the Personal Property Securities Register to become a secured creditor. You should then send an initial reminder and several follow ups – the Victorian Business website offers a template for each step, ranging from a friendly reminder to a formal letter of demand.
If you still have not been paid, consider using a debt collection agency or service as a last resort. Just note that if you use this tactic, you do run the risk of ruining your relationship with your client.
4. Scam alert
Scammers are on the lookout for any ongoing negotiations or discussions on sales and purchase transactions, so as to impersonate businesses demanding clients to pay a recent invoice into their bank account.
To avoid falling into this unfortunate situation, inform your clients that you would never ask them to change your payment details. You would only do so if you personally gave clear directives both in writing and over the phone.
As businesses rely more and more on technology, it’s important you are backed up with the right cyber protection insurance.
5. Insurance options
An extra layer of protection for your business will ensure your peace of mind. Which is why, the appropriate Business Insurance and Business Interruption Insurance for your business is another way to safeguard against potentially devastating risks, and help get you back on your feet in the event of disaster.
At East West Insurance Brokers, we understand the importance of protecting your business. If you have further enquiries on your insurance requirements, please get in touch with our experienced broking team today:
P: 1800 809 132
*Please note all insurance policies have exclusions. Please refer to the Product Disclosure Statement or Policy Wording before deciding whether the insurance policy meets your needs.