| Don't let postal disruption
affect your cashflow
With continued speculation in the news about a possible postal
strike, the Better Payment Practice Group (BPPG) has issued advice
to help businesses keep the cash coming in.
It’s easy to use postal
disruption as an excuse to ignore or delay the payment of invoices,
but by thinking ahead, firms can do
much to minimise the likelihood of customers using this as a reason
for late payment.
- Advise customers that you wish to be paid directly into your
bank account. You can do this in advance by letter or during a
strike by e-mail, by providing your bank account details and giving
each
customer a reference number so you can identify their payment on
your statements
- Ask customers who regularly place orders to set
up a standing order with their bank to pay you a specified amount
each month to
cover goods purchased.
- Consider offering an incentive to firms that
agree to pay by direct debit, perhaps a one off bonus, or a discount,
but be careful
to
cost any discount or bonus offered.
- Ask your bank for paying in
books on your account and give them to customers so that they
can pay their invoices at their bank.
Remember, you can fax or email invoices to the customer instead
of posting
them, and always provide a reference number to help reconcile statements.
- Personal
visits to customers located near you to deliver invoices and collect
payment can also work well. There is no need to antagonise
the customer by arriving unannounced and asking to be paid. All
it takes is a quick phone call to explain the situation and to
agree the method of payment. If cash payment is involved, a proper
receipt
must be provided for security reasons and to ensure no misunderstandings
occur.
- If you need to use a courier company to visit customers to
collect payments, it may be wise to set up such a facility now,
as in the
event of postal disruption, you may find these companies are
swamped with enquiries and you may be left disappointed.
- Consider if a
different approach is needed for large customers with high value
orders as opposed to smaller customers who regularly
order small amounts of goods.
Stephen Lewis, member of the Better Payment Practice Group, representing
the Credit Services Association, commented: “Firms
need to think through the consequences of postal disruption on their
cashflow.
Businesses should weigh up additional costs, such as courier fees,
against the cost incurred to the business by being paid late. Putting
a new system in place now will not only save time chasing debts during
a postal strike, but will also provide a better collection process
in the long run.”
You can keep up to date with the Better Payment Practice Campaign by sending us an email
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