Have you noticed the debtor days (the time it takes clients to pay) has slowly crept up in the last 12 months? Definitely a sign of the times as small businesses feels the pain of environmental and Government impact on the economy. I think it’s time to introduce some overdue debt etiquette..... Here’s my top 7 tips for debt etiquette.
Mindset is key! Yes, it’s uncomfortable and for some there’s shame and embarrassment, however, we’re all in this together. Focus on what you can do...muster your resilience and take action.
Communicate – There is nothing worse than wondering when or if a client is going to pay. Be pro-active and call people to let them know where you are at, especially if you’re not paying before the due date.
Make a list of who you owe and prioritise. From a mindset point of view, prioritising the smallest bills is good as it gives you quick wins by reducing the size of the list and reducing the number of people you need to call! From an operational point of view, prioritise based on the suppliers you work with the most especially the ones that supply you with stock (or parts and services) to make sales.
Consider proposing a payment plan with your suppliers. Calculate how much you can realistically pay them and over what time period, then give them a call and propose your plan. When you do this, you are providing an easy solution because they hate dealing with this as much as you do! Follow up the call with an email to make sure everyone is on the same page.
Check if your account is overdue before emailing a supplier demanding faster service, extra services or more product. You’re not likely to get what you want, and you end up putting them on the spot because as much as they want to support you, they also have a small business that supports their family and it’s likely you’re not the only one that is overdue with them.
Think about offering contra services or goods, it’s not illegal if it goes through accounting software on both sides and to be honest, it’s better to get something that you use, than nothing at all.
Keep your promises! If you promise to pay by a certain date but you can’t, ring your supplier straight away with a good reason and a new date. If you break trust with people you deal with in business, it takes a long time to recover the trust and get back to a good working relationship.
