Retrain Tardy Paying Clients to Improve Cash Flow

If you have historically allowed your clients to pay you after thirty or sixty days, you may find it hard to change their habit. Ensure you agree credit terms with your client when you initially set up an account for them to help avoid this issue. Ensure you consider any terms related to late payment fees, interest or even prompt payment discounts.

Communicating your terms and conditions to your clients

When you have agreed terms, re-iterate them to your client in writing so they are aware of when you expect them to pay you. It also makes sense to advise them how non or late payments will be addressed. For example, a three-step process may include: sending them a statement immediately their account falls due; then calling them after seven days overdue, and then referring them to a debt collection specialist after twenty-eight days.

Be firm – it’s your money!

Many small business owners are afraid to ask for payment when its due. They allow their clients to delay paying rather than risking losing clients by appearing “pushy” or too demanding. Be more assertive as your client has already received your service or goods. You’re effectively working for nothing until your paid – a sale is only a sale when you’re paid. The “squeaky wheel gets oiled first” – make sure you’re the important squeaky wheel.

Speeding up slow payers

Have you allowed your clients to pay after thirty days and now you want them to start paying after seven days? Changing their habit make require “baby steps” to improve cash flow.

Contact them much sooner and more frequently than you did previously. Call or email them after fourteen days if they’re used to paying after thirty days. Let them know your invoice is due and politely ask when they will settle your account. Or start putting pressure on a little earlier. A few days before your invoice is due send them a statement and highlight the due date. You could even call them to ensure they have received your invoice. If your client can’t (or won’t) pay your invoice in full consider taking a part-payment and giving them the option to pay in one or two instalments.

So give it a go – retrain your slow paying clients to improve your cash flow. By making a few small changes to your invoicing processes, you will be able to improve cash flow.

Tips for Project Risk Management Success

The benefits of risk management are vast, yet for many projects this is an area still commonly overlooked. By applying simple and consistent risk management techniques we can easily minimise the impact of potential threats as well as leverage potential opportunities. This not only ensures meeting the agreed scope, cost and time but also improves the overall health and efficiency of the project operation, team members and wider stakeholders. This article comes back to the basics on the key rules of managing risk, to ensure your projects are consistently delivered with full success.

Tip #1 – Implement a solid identification process
Sounds simple right. However there are still many projects today that are managed with absolutely no formal risk identification incorporated. Then there are others that think they are using risk management appropriately but are not applying the correct techniques to identify risks. The identification process will depend on the project, the organisation and the company culture involved. So it is best to consider those areas when determining the most effective approach. This could be as simple as educating the team on what a risk actually is and asking them periodically to review the landscape for new risks. Or for large projects the PMO can be leveraged to ensure risk identification is included in the drumbeat.

Tip #2 – Be positive
Risk management includes identifying and managing both negative risks and positive ones, yet most projects typically seem to focus only on the negative ones. Ensure to add clear reminders and pointers within your risk management process to consider positive risks. A deliverable being delivered well before its due date can be a good thing, but also can have unforeseen impacts on other areas or leave the project operating inefficiently. On the other hand such a positive risk can actually help to balance out the impact of negative risks in other areas.

Tip #3 – Prioritise for efficiency
All risks are not equal and there is always limitations around how much resource can be applied to mitigate them. As such it is essential to classify risks in terms of ‘probability’ or how likely the risk is to occur and ‘impact’ level if the risk materialises into an issue. By doing so will allow the project manager and all team members to easily see which risks are priority to focus on. Use of a risk register template is a very effective means of doing so. Most organisations would have a standard template for this or if not there are many that can be found online.

Tip #4 – Apply correct ownership
It is often common for people within the project organisation to assume that the project manager owns all risks but this is completely false. Risks can affect wide areas of the wider stakeholder group and it is typical that resources with the relevant knowledge or skills in that area are much better placed to become the owner of the risk and to carry out the appropriate mitigation actions.

Tip #5 – Communicate and track to closure
With correct identification, classification and owner allocation in place we need to be careful as project managers that this is not considered to be the final step in the process of risk management. At this stage it is critical that the risks are correctly communicated. Firstly to the owner assigned to manage the mitigation actions and secondly to the wider stakeholder group affected so they are aware of the risk and potential impact to their respective areas. It is also then essential that the risks are regularly monitored and tracked through to closure regarding progress on mitigation actions and potentially changes to the impact / probability classifications as those actions come to fruition.