The world is in such a state at the moment and nobody is quite sure how to proceed with any degree of certainty. In regards to selling, invoicing and ensuring you are paid promptly however, nothing has changed. Now is not the time to procrastinate and acting with a strong focus on protecting your business’s cashflow, is essential.
The longer you wait, the less likely it is that you will get paid. Furthermore, even if you do get paid, the risk is greater than ever that these payments could be subject to a preferential payment action by an Insolvency Administrator. In order to maximise cashflow and profits from sales, and also avoid refunding any possible preferential payments, you need to start with:
- management and the other employees working as a team;
- protecting all aspects of your business’s reputation;
- employing highly qualified or experienced professionals at every stage of the business process;
- maintain effective processes suited to these times;
- good business disciplines;
- a customer centric organisation focused on creating customers that add value and clearing out those that are unprofitable, time wasters and profit robbers;
- keeping every customer that is profitable, no matter how small that profit may be; etc.
It is these factors which will ensure you have an authorised and sensible trading relationship with your clients. The correct relationship structure for each customer, is so important when it comes to selling, plus raising a valid invoice and getting paid within terms. The fact is; every time a sale is not processed correctly with a valid invoice, you give the customer a chance to delay payment.
Remember, there are two sources of problems when sales and invoices are not raised properly. The first source is from the imperfections within your own business. The second, will be your customer.
We are also living in a time when due to the COVID19 virus and government actions, up to a third of businesses in many business categories have already gone out of business, or will go out of business shortly.
Therefore, processing sales and raising valid invoices will be a be a critical factor in surviving. After all, process an invoice incorrectly and by the time it is corrected you could find:
- the customer has gone out of business;
- an insolvency administrator is appointed, which means you don’t get paid;
- an insolvency administrator is appointed and you receive a preferential payment notice for the payments received in the preceding months;
- you miss a payment run and have to wait another month for payment;
- the customer’s original authorising person has left the business and the new one cannot be located, or refuses to authorise the payment of the invoice;
- a purchase order was not obtained prior to raising the invoice at the time of sale and further delay is incurred in getting paid;
- the customer pays by cheque, and with delays with postage these days, who knows what happens whilst the cheque is in transit? etc.
Moving forward, if an Insolvency Administrator is appointed, do you the experienced people who know how to deal with Administrators? Having access to the right people, is worth dollars in the bank. For instance:
- do you know how each type of Insolvency Administration operates; or
- how to respond to Administrators; or
- when to pay or not to pay, and
- if payment is required, how to negotiate the size of the preferential payment refund; or
- how to structure interactions with a customer suspected of trading insolvently so that any payments which are received, might not have to be refunded as a preferential payment.
The world is in such a state at the moment that nobody is quite sure on how to proceed. This is not the case when it comes to selling, invoicing and ensuring you are paid promptly. Now is not the time to keep procrastinating about unpaid invoices. It is now critical that you start acting with a clear-cut focus to get paid as quickly as possible is essential.
Therefore, you need to ensure you have the right resources so that your sales result in a valid invoice being raised and you are paid as quickly as possible.
Further information can be found in these two features, “The Anatomy of a Recession” and “What will the future look like in 2020 for B2B Credit?” which can be found at www.creditmatters.com.au or you can contact Kim at email@example.com for a confidential discussion of future possibilities.