A while ago a client called us with a dilemma.
Her secretarial business was thriving and growing. But in growing, she was experiencing the all too common cash flow problems of having to carry accounts.
While she must pay her staff and overheads during the month, her clients were taking 30 days or more to pay her.
In an attempt to speed up the flow of cash from her clients, she added this line to her invoices: “This invoice is now due and payable within seven days of date of invoice”.
Clients clearly judged that “within seven days” really meant 30 days!
Now, after some ideas from us on how to maintain goodwill with her clients whilst asking for payment, our client has largely solved her problem.
Together we devised an effective 3-Step process. The success of this was incredible, so much so we'd like to share it so that it can benefit you too...
She replaced the “payable within seven days” wording on her invoice with the specific date that payment was due: “This amount is due by 14th September”.
The effect of just that alone was astonishing. Many people began paying on or within days of the specified date.
But if they still don't comply, she calls upon ...
A simple handwritten “with Compliments” slip reminder (importantly she observes, this slip is handwritten and mailed in a stamped, handwritten envelope.)
In fact, after mailing this friendly reminder, the accountant of one company walked personally into her office to pay the bill!
For those who are still slow to pay, she has a ”reasoning” letter. The wording is worth studying, here it is...
I'd like to explain a problem I'm currently having in running our business.
As you know, it is important to us that we do good work for you. And we certainly always do our very best to meet your deadlines.
But to maintain a high level of service to you, I've got to maintain a steady cash flow. Our business just isn't big enough to carry accounts for more than about a week after the end of the month in which the work is done.
And that's what my problem is.
You see, the account payments have been dragging a bit lately and that has been putting a strain on things.
James, I'm sure you appreciate the convenience of your credit account with us. It saves you having to pay cash every time you have some work done.
But I do need to keep everyone to the terms of their account if I'm going to keep Organised Offices running smoothly and effectively. So I would certainly appreciate you bringing your July account up to date.
I'm looking forward to continuing to provide you with excellent service. And if there are ever any problems in anything we do for you, please pick up the phone and talk to me direct.
Simple approaches ... friendly but firm ... and effective.
For more ideas on improving your cash flow, read our article Are Your Invoices Destroying Your Cash Flow?
To get better results in your business by improving your marketing, contact us online now or call us on 01536 747 310.
You can also sign up to our free newsletter to get regular information on strategies that will help you get more from your business.
To read more articles related to this go to the Marketing Foundations section of the Academy.