Historically, and in even in many business enterprises today, there is still the perception you must wait until the invoice is past due your terms of trade. In certain industries, this may still be the way business is conducted. In today's business environment, such operational thinking is old-fashioned and no longer justifiable.

Today, you will often experience through the overt or covert actions employed, how customers can arrange a process to slow-pay their suppliers. In other circumstances, poorly created billing systems used by the customer, can cause problems. It is therefore no longer always best policy to wait for an invoice to be "past due" before contact is made. In fact, there are many positive reasons for being proactive and assertive (not aggressive) in following up invoices before they are past due for payment.

A polite and pre-emptive enquiry telephone call or email, can often identify whether your invoice(s) are;

(i)  in the next payment run;

(ii)  have not been received

(iii)  cannot be paid because they under dispute and the issues will need to be resolved before the invoice can be authorised for payment;

(iv) identify any problematic issues as early as possible and take proactive action if required;

(v)  to identify and plan for high workload periods;

(vi) to identify inward cashflow performance; and

(v) protect budget expectations plus assist the development of more accurate future cashflow forecasts.

Making an early and proactive contact is appropriate in the following circumstances.

(i) Known slow payers are contacted to try and encourage them to pay as soon as possible.

(iii) Contacting a major customer to ascertain what invoices are to be paid or which deductions have been authorised and will be shown on the next remittance advice. A co-operative customer employee may also forward the remittance advice early to allow you to reconcile the account and so the allocation can be completed quickly on receipt of the payment.

(iii) To clarify when a large dollar invoice is due for payment. When large dollar invoices are not paid on time, this can have a detrimental effect on a business's cashflow.

(iv) The new customer prior to the first invoices becoming due for payment. Reinforcing that your business expects to be paid within the expected and agreed payment terms is an important strategy in protecting your business's profits and cashflow.

If you would like to know more about the theory or process of making pre-emptive contacts, please contact Kim at kim@creditmatters.com.au