Getting Paid: Bibby Financial Services Offers Small Businesses Tips to Improve Their Payment Cycles

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With the economic recovery still rather tepid, small and medium-sized businesses are being hurt by slow paying customers; the result is a cash flow squeeze. Bibby Financial Services, a leading provider of factoring and accounts receivable financing, is offering small businesses tips on how to improve their payment cycles and avoid bad debt situations.

Bibby Financial Services

“Late payments squeeze cash flow and chasing money is time consuming and expensive. When a customer’s payment cycle slows down, a business owner must immediately address the situation The goal is to get paid and keep your customer for the long term.

With business owners still seeing their cash flows squeezed by slow paying customers, Bibby Financial Services has compiled five tips that small and medium-sized businesses can use to improve their payment cycles.

“As the economy continues to limp along, customers are paying their bills slowly, leaving business owners to wonder how to collect on their invoices more efficiently,” Bibby Financial Services Managing Director Ian Varley said. “Not only do late payments squeeze cash flow, but chasing money is time consuming and expensive. When a customer’s payment cycle slows down the smartest thing a business owner can do is immediately address the situation . The goal is to get paid and keep your customer for the long term,” Varley added.

Here are some tips on how to improve your cash flow and avoid bad debts:
1.    Pay attention to how your customers are paying their bills. This is a reliable indicator for assessing liquidity and future ability to make timely payments. If somebody starts to slip, don’t ignore it.
2.    The first call to your customer can be a simple inquiry: “Were the goods delivered satisfactorily?” Then, establish an expectation for when payment will be received: “When do you typically cut checks? So ours will be sent then, correct?” Your objective is to confirm there are no simple paperwork issues interfering with the process.
3.    Be friendly but firm. Find out what problem your customer is experiencing; perhaps it can be solved with an installment payment plan. If you extend terms, you should be paid for it. You don’t want to end up financing your customer’s business at your expense.
4.     Continue to call your customer and stay in touch with faxes and emails. Send monthly statements. Call at regular intervals and reference previous agreements for payment. Your objective should always be to get your invoice to the top of their pile.
5.    Be persistent. Don’t give up until you get something out of each conversation, such as the promise of payment by a certain date or an agreement as to when you will have another conversation. If necessary, elevate the issue to higher management or the owner of the business.

“Finally, don’t hesitate to stop further shipments or service if your invoices are overdue – increasing the balance outstanding to a customer who is not paying you just increases your risk of significant bad debts. And, at some point you may need to resort to legal action,” Varley said. “Go to court when you must. Remember, the goal is to get paid. “

Bibby Financial Services is a worldwide market leading specialist of business cash flow solutions to small and medium-sized businesses. With offices in 10 North American cities and 11 countries around the world, its product portfolio includes receivables finance, factoring, export finance, purchase order finance, specialist solutions for the staffing and trucking sectors, and is an approved lender for the Export-Import Bank's working capital guaranty delegated authority program. Bibby Financial Services is a subsidiary of The Bibby Line Group, a 202 year-old privately held company based in the United Kingdom. Please visit us at Facebook for expert advice on small business financing.

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Lisabeth Weiner
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