January is generally the most financially difficult month for most companies, with businesses trying to avoid starting the year with outstanding debts and a poor cash flow forecast for the first quarter. However, Christmas can be a useful deadline for chasing outstanding invoices. So how do you make sure most of the company’s outstanding invoices are paid before then?
Understanding this, expert payment solution specialist Faye Duncan from online merchant service Total Processing explains how businesses can process invoices before the Christmas cut off to avoid starting the new year with a poor cash flow forecast.
- Send your invoices in early December – For most of the year, accounts payable teams set up monthly payment runs in the last few days of the month, however, in December, accounts teams tend to move their processing earlier in the month so everything is complete before Christmas. To make sure you get paid, get your invoices out in plenty of time in early-mid December, along with a statement of any other outstanding payments you’re waiting on. Invoices that arrive in the last two weeks of December are likely to miss the cut-off. Be sure to include payment terms and due dates, and clearly state that you expect to be paid in the December payment run.
- Start with customers that have December year-ends – Start by looking at customers with 31 December year-ends. Some businesses hold off paying bills until after the year-end date in order to make accounts look more favourable. To reduce the risk of this, get in touch with customers that have December year-ends first, and send those invoices as early as possible and preferably online. Once you’ve sent the invoice, talk to the accounts team and remind them that you expect the invoices to be paid according to your terms (and before the month end).
- Get to know the accounts team – To improve your chances of getting paid, find out who in the accounts payable team looks after your business and get to know them. Make sure you know their name, business email and phone number in case you need to chase. Of course, last minute attempts to woo the account team before Christmas, might not be effective: but there’s no time like the present to start building that relationship for next year.
- Do your invoicing online – Online invoicing cuts down on admin, allowing you to get your pre-Christmas invoices out in good time and cutting the process down by potentially 3-4 days. Email your invoices directly to your customers’ accounts team without having to print and post hard-copy invoices and without having to worry that it might get lost or delayed in the Christmas post. Online invoicing also makes it easier for your customers to pay you giving them a wider variety of payment options.
- Automate payments using direct debit – Avoid chasing invoices by automating your payments using direct debit. A lot of businesses don’t realise that direct debit can be used to collect variable amounts on variable dates, so it’s perfect for those who collect payments by invoice.
- Know who is on holiday and when – During this time, customers or contacts are often on annual leave and it’s important to know who and when. Now is the time to reach out and ask your customers if they’ll be taking a break and when they’ll be back. You’ll need to know who is on holiday and who can be your contact so that processes can be completed as quickly and effectively as possible..
- Have a friendly reminder message – Manage this by sending an email or calling your customers to remind them that your business will be closed over Christmas. This helps finalise payments before you are unavailable until next year. Make your message friendly and not sound like an ultimatum. You’re helping your customers by getting their payments up to date.
