Financial Guide for SMEs - SME Corporation Malaysia

Financial Guide for SMEsTIPS FOR IMPROVING RECEIVABLES COLLECTION•••Send out invoices as soon as work is completed, not at the end ofthe week or month.Provide incentives to pay early (e.g. a discount, but know the impacton profit margin).Make it easy to pay – direct credit arrangements or credit card.• Where commission is paid to sales staff, pay commission on amountscollected, rather than on total sales amount ordered.•Produce regular reports to identify when payments are due.• Identify slow paying customers and make contact early to discuss onany issues (e.g. faulty goods, inadequate service, inability to pay).•••Monitor non-paying customers and keep in regular contact.Make arrangements for non-paying customers (payment plan toclear the debt).Have a policy to stop supplying a customer until all debts arecleared.• Send letters of demand for long outstanding debts and if necessary,use a professional debt collector.• Remember, a good customer is only one that pays. If you are notcollecting the cash from your customer, then your organisation isfunding your customer’s business as well as your own.•Consider “terminating” a customer if they are unreliable in makingpayments63Chapter 2-5 p22-65 Eng.indd 638/15/11 5:01:59 PM