Many businesses have moved to monthly billing to match the service that is provided to try to avoid not getting paid on time. However, for some businesses this is a model that can’t be adopted and very few small businesses have the resource to employ a credit controller.
Credit control is important but can also be time consuming and sometimes can’t be top of the list of priorities in the day.
A lot of the online bookkeeping products have add on’s that can be purchased to at least systemise some of this work. For example, the invoice can have a pay now button that allows card payment to be taken to try to encourage prompt payment.
There can be an automated system to send out reminder letters via email if the debt is outstanding at a certain point and another letter at a further point in time. Most people will pay if they are chased regularly.
Unfortunately, some will have to be chased via phone or face to face to get a payment but hopefully this will only be a small percentage overall.
If you don’t have an online system that can do this then the system can still be replicated manually but obviously this will need some resource to do on an ongoing basis and it’s important to have a system in place to chase up debts at an exact point so that people realise you are serious about collecting the money.
In general, if someone is always late paying then it may be that they need to make a payment in advance of the work being done perhaps by direct debit at a small amount per month. Many businesses can also accept card payments now which allows instant collection.
A large part of avoiding bad debts is like most areas of the business, knowing the people that you are dealing with and setting time aside regularly in this area to follow the systems that you have.