The end of the year can either be an unwinding time for some departments or a mad rush for others. Unfortunately, within finance and credit control, it’s arguably the busiest time of the year. With many offices and industries shutting down before the Christmas period, there is only a small window to get your invoices paid by your customers. If you go into end of year with unpaid invoices it may damage your cashflow as you will have to float the unpaid balance yourself over the Christmas shut down period. According to our figures, in quarter 1 of 2015, 62% of invoices were paid late, which could indicate a back log of invoices that weren’t settled towards the end of 2014. But don’t panic, lots of businesses close over Christmas and are in the same boat as you, therefore the key to getting paid before Christmas is trying to reach out to your customers as early as you can.
Don’t forget the Christmas shut down
The process of invoicing is sometimes a slow and automated one. If your usual policy is to have automated invoices set up to send at the end of the month, you may want to amend this for December. Offices could work up to Christmas Eve, but Bacs payments will need to have been submitted by 22nd December to be received before the holiday shut down. Sending your invoices out earlier (with crystal clear due dates) and chasing them up sooner can help you get your cash in the bank before Christmas. If you cut all your usual waiting times in half, this should cover you. Send invoices sooner, request payment sooner and chase the invoices sooner.
Find out which customers have a December year end
If a company’s year-end is approaching, some will try to keep as much money in the bank as they possibly can for their business to seem like it’s got more floating cash than it has when they file their accounts with Companies House. If you have customers who have an end of year at December 31st, they will probably try to avoid paying you until they absolutely have to. Do some research at Companies House and find out when their end of year is. Chase them for payment sooner if they are approaching end of year, especially if their end of year is within the shut-down period. Send an invoice out to them as soon as you possibly can to try to get it paid before offices shut.
Have a close connection with your customers
If you know who pays your invoice, try to get to know them and contact their direct lines. Bigger companies may have a finance or credit control department who pay their invoices, however they may not always be the people who sign off for the invoice to be paid. Check your invoices for names of the decision makers and try to contact them. People like people, and if they like you they are more likely to pay you when you ask them to. Attaching a little Christmas card in with your December invoice couldn’t hurt either.
Create or improve Direct Debit payments
The easier you make it for customers to pay you, the more likely you are to get paid. Direct debits is a quick and easy way to receive both recurring and ad-hoc payments. If you have direct debits set up to go to your account, encourage more customers to use them to pay you before the year ends. If you don’t have direct debits set up, do it for 2016 to ensure a smoother process for the future.
Remember, always being polite and friendly will always work in your favour when requesting payment from customers, therefore some festive cheer around December time will no doubt be no different. Be firm with customers, but never aggressive or demanding.
So there you have it, get your invoices out, your payments in and enjoy the holidays with ease!