For the final chapter of the "Show Me The Money" series we are going to focus on the tale end of the buyer journey - conversion and payment.
Great the deal is done! Your sales team has negotiated terms that maximise margin and minimise the length of payment. Or have they? Well, either way the most important thing now is to ensure you get paid. This part of the customer journey is one that is often overlooked and poorly managed, which in turn can be detrimental to the customer relationship you have just invested in prior. To make sure you get paid and maintain strong cash flow, the following simple steps can be taken:
- Clear and verified audit trail - the sales of the product or service should be clearly documented manually or electronically. The purchase order or contract needs to clearly stipulate terms and conditions. Upon delivery you raise the invoice in line with scope of work and delivery terms. It is important all terms are aligned and supported by supplementary documents like a 'proof of work', 'delivery notes' or a 'bill of lading'. To mitigate the chance of exceptions down the line, demand they confirm receipt and acceptance of your documentation. Simple measures that can save a lot of pain in the future!
- Implement a collection communication plan - no matter how strong your relationship, sometimes your customer's Accounts Payable team fail to process and pay on time. Unfortunately being an SME doesn't help. Proactive nurturing of the payment processing cycle can ensure the responsible stakeholders are pushing the right buttons as agreed. This process needs to be managed delicately as like when you are selling, you never want to hassle and cause unnecessary friction. You could compose manual emails on set days throughout the cycle or now capitalise on smart collection management systems like Debtor Daddy, who use smart behavioural communication to manage the relationship.
- Accelerate the payment using invoice finance - take away the stress of long payment terms. Invoice finance platforms enable you to get paid upfront while maintaining terms with your customer. This gives you the following distinct advantages:
- For a small discount (average 2-3% for 60 days) to get cash upfront, you can now reinvest funds back into the business and drive more return from each dollar.
- Encourage more customer demand by offering extended payment terms to they have stronger cash flow.
- Pay suppliers early and capitalise on payment discounts.
- Stronger audit trail management. Invoice finance is more economical if there is greater certainty of payment. A clean and clear audit trail enables you to unlock a higher cash advance upfront.
Cash flow is the lifeblood of any business. Take the necessary steps throughout the customer journey to cultivate trust and respect with your customer so the ball is in your court when it comes to your customer paying.