When it comes to profit margins and building a successful business – Marketing and Sales strategies are obviously important. But often overlooked are arguably the most vital processes of any business – credit control, collections and receivables management. Put simply – if your customers do not pay – your business won’t last long.


Long gone are the days of bully boy collection tactics and in reality, the modern world provides too many "get out of jail free" cards for unwilling payers – leaving the burden of unpaid invoices and bad debt at your doorstep.


Best Practice for Securing Payment

As the saying goes - prevention is better than a cure – and this is true in every way when it comes to bad debt. When business owners take a flippant approach to believing their customers will ‘just pay’ – this is often the beginning of a slippery downhill slope.


Preventing the bad debt scenario is not always going to be possible and in fact, any sound business plan should have appropriate provisions in place for this – it’s a fact of life that must be accepted and considered. But adopting some simple measures and having controls in place – and ensuring they work correctly is often all that is required to get ahead of that unpaid invoice.


If you’re thinking at this point “Well this is all just common sense” – then you’re right! In most cases, B2B transactions should not be difficult and conducting a little due diligence before supplying the customer with your goods or providing your service is time well spent. 


So, what are these simple preventative measures I hear you ask – well let’s explore a few simple but key points that can assist in controlling the bad debt for your business:


1. Know your customer – build rapport

A few simple online checks can tell you a lot about your potential customer – payment trends – CCJ’s etc. Speak to them before onboarding – what do they want from you and what do you want from them? Be open and honest and start out on the right foot.


2. Payment Terms - be realistic

It’s no good to demand payment terms on your invoice if your customer has an existing process that is way outside of this. Discuss this beforehand and compromises can often be reached – but unrealistic expectations on terms are not a good start to building a good relationship and only leads to overdue invoices.


3. Administration – get it right first time

A common tactic of avoiding payment that we’ve all heard a thousand times – "I don’t have your invoice – can you send me a copy!" Avoid these payment delays by establishing the correct communication lines for whoever handles the payments and invoice processing. Do a test run to ensure the whole process works before ‘going live’ and follow up with them regularly.


These are just a few areas that contribute and success in controlling bad debt is certainly not limited to just these. This is a broad topic and I’ve not even touched on the effective collection of overdue invoices!


Why not consider exploring the world of invoice factoring and let our team take all this burden away – allowing you to concentrate on delivering to your customers time and time again.


Thank you to Joel Pritchard for his top tips on non payment prevention. The GRENKE invoice finance team work with clients across the UK securing cash flow with professionalism and consistency, speak to them today.