Full Focus Limited
P O Box 33489
Takapuna, Auckland
t: 09 489 1650
f: 09 489 1650

Contact us via email

David Martin: 0274 902 401
Kathy Martin: 027 2800 564

Estimated reading time: under 5 minutes

Please feel free to forward this on

How you can keep your customers paying on time, every time

Following on from last month’s newsletter (“Why you should have both eyes on your cashflow”) it seemed timely to focus on just one area of your cashflow – namely, keeping a steady stream of it (cash) coming in.

In a perfect world you wouldn’t start a job unless your customers paid the entire price up front.  Unfortunately things don’t usually work that way.  It’s not impossible to get such favourable terms, but this all depends on your bargaining power (eg. if there’s little or no competition and your product/service is in high demand).  Most small business do not have that kind of power. 

What can you do to reduce the risk of not getting paid? 

Here are some ideas:

• Be absolutely clear about your payment terms and ensure your customer understands them
• Make sure you follow through on your terms of payment – any slippage by you in this area will leave the door wide open for your customers
• Don’t wait until the job is completed to invoice your customers.  Get them to pay a portion of your charges upfront (similar to a deposit).  Depending on your industry, progress payments may be acceptable.  A final payment can be made on completion of the job.
• Encourage customers to pay by credit card
• Have as much of the transaction as possible clearly documented and signed (wherever possible) – quotes, work orders, purchase orders, sales invoices, packing slips etc.
• Allow customers to take early payment discounts
• For accounts that are past due, follow up with a phone call straight away.
• Consider charging interest on balances that are past due
• Do credit checks on new customers

If you are in the unenviable position of having debtors who simply will not or cannot pay, here are a couple of ways you could deal with it:

• Work out an agreement that works for both of you.  eg. regular automatic payments to pay off the outstanding amount in a manner that works with your debtor's cashflow
• Bring in the debt collectors
• If the debt is small, you may consider simply writing it off and not doing business with that customer again.
• Take legal action?  Beware of this....   Legal action may only cost you a lot of money and frustration.  You may force your debtor into bankruptcy, but it will not guarantee that you get your money back. If the money’s not there, then it’s not there.   Think carefully before you go down this tunnel.

The bottom line is you must keep tight control on your debtors.  That is your very best protection.

Interested in reading more on the topic of getting through the economic downturn?

Take a look at our May 2008 newsletter “Surviving the so-called economic recession”, or our December 2008 newsletter “Succumbing to the madness of the crowd”.  

If you know someone who this newsletter could help, please feel free to forward it on to them.

Do you have any questions?

Please don't hesitate to contact us by hitting the "reply" button in your email programme, or by sending us a separate email. We'd be happy to discuss them with you.

Full Focus Blog

Don’t forget to check out our latest blog posting. We talk about some appalling statistics regarding businesses and their bank borrowings!

Check out Kathy’s blog on Women in Business. 

Keep up to date with comments on the eBook and find out how to order your own copy.  You may even have some great comments, feedback or suggestions – please feel free to send Kathy an email or leave comment on the blog.

Do you know someone we might be able to assist? Please give them our contact details, refer them to our website, or provide us with details so we can contact them. Click here to see how we’ll handle your referrals

If you’ve received this newsletter from a friend or colleague, you can register here to get your own copy.

You won’t ever receive email from a stranger as a result of subscribing. Our list is never sold, loaned or provided to anyone. 

By subscribing you’ll receive Recent Focus once a month.  We won’t send you any other promotional material unless you’ve specifically requested it.

Read the May issue of recent focus “ Why you should keep both eyes on your cashflow".

Read previous issues of Recent Focus

Visit our website

If you no longer wish to receive this newsletter, please click here