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Getting paid is arguably the most important aspect of your business.
But many, many companies find it very difficult to actually collect all of the money that is owed to them.
What follows is a simple, but very effective how-to-get-paid process that
any business can implement without spending much, if any money.
Step # 1: Getting paid starts with good communication.
Formulate a pricing policy and price sheet that is comprehensive and updated regularly. It must be in writing and stored in a folder that is easily accessible to the appropriate associates.
Share this price sheet with every sales and customer service rep. Confirm that all aspects of it are fully understood by the entire team. Provide updates as needed.
As your product or service is sold, ensure that your team has conveyed clearly to your customer exactly what product or service they are purchasing, how much it costs and the complete payment terms under which they are purchasing it.
Step #2: Getting paid relies upon good recordkeeping.
Collect accurate data on what you are selling:
If you sell a product, ensure that your point-of-sale/point-of-order/point-of-distribution system(s) are up-to-date, accurate and fully utilized by your staff.
If you sell a service, make certain that your contracts or other written description of service is complete with deliverables, timelines and estimated costs as well as all other pertinent data.
If you sell your time, confirm that your timekeeping system captures 100% of the time spent on your client’s behalf.
As the order is being placed, it is important to know:
Exactly what is being ordered; in what quantity and at what price.
When the customer is expected to pay.
Specifically, who is responsible for paying the invoice? Is it the person placing the order or an Accounts Payable associate?
The full contact information for the person responsible for making the payment.
The best way to collect this information is at the start of the ordering process.
If you don’t have a ‘new customer’ form, customize one (see sample below)
to ensure your sales team is getting all the pertinent data.
Step #3: Getting paid requires timely preparation & delivery of invoices.
Timing is important:
BEST PRACTICE: prepare invoice in advance of purchase and deliver directly to customer at the time of purchase.
If it can’t be done at time of purchase, complete and send the invoice as close to the purchase as is possible. Faster is so much better.
If it is a long engagement, set up milestones with the customer that allow you to invoice as that milestone is reached. Never allow an invoicing situation that exceeds a 30 day window.
Details are important:
Provide an exact description of the purchase; product name, product number if appropriate, quantity purchased, unit price, total price, any other add-ins etc.
Follow your customers’ “rules” exactly. Do they have to have a PO #, for example?
Provide exact details about how payment can be made (cash, checks, credit, Pay Pal, terms etc.).
Delivery of the invoice should be made through the fastest route possible (usually email).
Step #4: Getting paid necessitates quick action on receivables.
Set a best practice of monitoring and reporting on your receivables weekly.
Act quickly when someone hasn’t paid. The sooner you reach out with a reminder, the more likely you are to collect easily.
Have a simple set of collection reminder emails in place. You should have one for each of 30-60-90 days in arrears. Click here for some simple suggestions.
Set a timeframe in which you discontinue working/selling products to a client who has not paid. Stick to it. When that date is reached, send them an email telling them that you are sorry, but must discontinue service until they have made the necessary payment.
Develop a relationship with a collections service.
Don’t wait. Once a customer reaches the 120 day mark without paying or making some arrangements to pay, send the matter to your collections partner.
If you need any more prompting to get this payment process in place, remember…
You have performed the work or provided the product, you deserve to get paid!
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