Many years ago I was being interviewed by a finance director for a role within his team. Actually the role was to work closely with him, and set up & manage projects on his behalf.
Towards the end of a tough interview he surprised me with what I thought was a fairly simple question …… “what steps would I take to make sure we collected cash on time from our customers”
I headed straight into a fairly comprehensive answer:
- contact the customer and make sure they’d received the delivery, and all was ok – no damages, missing items etc
- if there are damages or missing items, deal with the matter promptly and raise a credit where needed
- make sure the sales records were kept up to date so that I don’t later waste time chasing invoices that had already been paid
- keep a file or record of outstanding invoices
- contact the customer a few days before the invoice due date to make sure payment was imminent
- set aside specific time to chase overdue invoices & keep records of all correspondence
- check to see if the customer is having difficulty paying
- if yes, could we organise a payment plan/do we need to stop future orders
- if non-payment continued, take the appropriate steps to collect the debt legally
I sat back and waited for the finance director to voice his praise for my answer and conclude the interview.
Instead he simply said “Would you send out an invoice?” It seemed that within his team, someone was forgetting to do just that causing his business severe cash flow problems.
Sending out the invoice is the most important step in collecting cash, but unbelievably is often ignored or delayed by businesses. Managing cash is already difficult enough, but why make the task harder and put the health of the business at risk?
I’ve taken that one interview question with me wherever I’ve worked, and I always ensure my clients aren’t missing out the vital step in collecting cash.
Always send out your invoices on time. It makes your life so much easier!