Making it easier to get paid – Part 2: Automating credit control with Chaser

In Part 1 of this series on getting paid, we highlighted how the latest payment technology streamlines and automates a large chunk of the payment process. But when customers don’t pay on time, how do you manage credit control in the most effective way possible?

The answer is to use the power of automated credit control apps, like Chaser, and to make sure you’re following best practice when it comes to managing your aged debts.

The negative impact of credit control time

37% of UK small businesses run into cash-flow difficulties because of late payment issues, so unpaid invoices are clearly a big challenge for many small business owners. And getting these outstanding bills paid can be a real drain on the productivity of your company.

When debts needs to be manually chased, that means:

• Wasted business time – if you take off your CEO hat to become a credit controller for the day, that’s time you’re not focused on strategy, customer service or exploring new opportunities for the company at large.
• Poor cash flow and debt issues – when expected payment doesn’t arrive, that throws your cash-flow forecasts out, meaning the business can end up in a negative cash-flow situation, and with an ever-growing list of aged debts in your accounts dashboard.
• Pressure on customer relationships – constantly chasing your customer’s accounts payable team to cough up cash isn’t great for creating a positive working partnership. So if a customer is habitually late with payment, it can soon ruin your relationship.

Once an invoice is overdue, it’s in your own interests to be proactive about chasing for payment. But how do you minimise the negative impact of these debts, and the related credit control time, on the future productivity of your business?

Getting on top of your aged debts

The key to good credit control is having a clear process in place to manage your aged debts, with agreed procedures on when (and how) you chase up those late-paying customers.

Regular monitoring of your financial performance is vital to keeping your finances in check. And a big part of maintaining this health is keeping a very close eye on debts and overdue customer invoices.

Good debt management begins with:

• Tracking your aged debts – make sure that your accounting software is set up to show late invoices and aged debts up front in your main dashboard.
• Keeping a regular check on debt levels – don’t ignore those red figures. Check your aged debts as often as possible, build these reviews into your regular finance cycle and take action quickly to chase for payment.
• Highlighting regular offenders – track who’s paying well, and who’s habitually late. If a customer is constantly late, ask yourself if it’s profitable to carry on working with them.
• Being firm, but polite, with chasing – no-one enjoys having to ask for payment, but sometimes you have to get proactive and firmly tell the customer to settle their bill.

Working these procedures into your monthly financial cycle, and building your debt figures into your scorekeeping, is a good way to stop debt becoming an issue. The more proactive you are, the less impact late payment will have.

How Chaser automates your credit control

There is, however, one inescapable truth of credit control: chasing up late invoices does take a fair amount of time and effort – and that can start making you unproductive.

So, why not let technology do some of the heavy lifting for you?

We’re big fans of the Chaser automated credit control app, and have seen first-hand how automating the chasing of outstanding invoices turns around both cash-flow and financial efficiency in a business.

We spoke to Chaser founder and CEO, David Tuck, to get his viewpoint on why automation is the way to go for businesses that need an effective way to manage debt.

“Every business needs to manage its cash flow well, no matter the size – it’s what keeps the business running and growing. But credit control can be daunting for small businesses, having to juggle emails, phone calls and hand-written notes, alongside everything else they need to do to keep their business going.

That’s where automated credit control comes in – it unburdens finance teams from the huge time-cost of running an amazing credit control function and does wonders to boost cash flow. Chaser is the culmination of my passion to bring businesses the best tools to achieve this.”

With Chaser integrated directly with your Xero online accounts, the whole process of chasing late invoices becomes completely automatic. And although these are automated chaser emails, they’re based on templates and wording that you – the business owner – defines, keeping them prompt, personal and polite.

As David himself points out, it’s about getting the perfect combination of efficient automation and direct human communication:

“I’ve seen that around 80% of invoices can be successfully chased with emails alone. Chaser allows you to automate that, without losing the human touch – who wouldn’t want those time savings?”

Working with a proactive accountant

Software makes a huge difference to the workload of financial management. And when you add in the benefits of working with a proactive accountant to manage your debt strategy and scorekeeping, late payment needn’t become a threat to cash flow or profitability.

We work with business owners and their finance teams to draw up an aged debt management process that helps minimise the impact of late payment, and keeps you in complete control of the pipeline of income that’s so vital to your short and long-term success.

Combining technology, best practice processes and a great accountant helps you reduce debt, save time and be more efficient – and that efficiency will help you drive positive cash flow, bring in profits and give you the solid foundations for a healthy business.

Who are FD Works?

FD Works is an accountancy firm based in Bristol and Bath. Our team of accountants and business advisors help startups, scaleups and established firms identify the drivers for growth in their business.